Investing in property in the UK? Find out what is a good rental yield
The UK stands strong as Europe’s most reliable buy-to-let success locations. With their stable economy and cosmopolitan cities, thriving with action and work opportunities, drawing in people from all over the world, the industry is booming.
If you’re new to property investment or interested in taking the big leap, it’s best to find out what you’re in for. It can be time-consuming and stressful, however, property investment is still one of the safest things you can do with your savings. If done correctly, you can maximise your revenue with little risk. Start your first few steps now and learn about what are the best cities to invest in.
Table of contents
- Where is the best place to invest in property in the UK?
- What is a good rental yield in the UK?
- Why invest in property in the UK?
- What is UK’s tax on rental income?
- Short, mid or long-term?
- Invest in the UK with GuestReady
1. Where is the best place to invest in property in the UK?
Although the UK’s stable economic environment is very reassuring, if you’re buying property as an investment strategy, knowing where to find the best rental yields is the game-changer that will turn your savings into profit.
Whether you’re an experienced investor or a newbie planning to boost your revenue, you may want to consider our top picks of the cities best worth your investment – we’ve done the research so you don’t have to.
Buy to let Manchester
- 6.5 % rental yield
- £1.941 average price per m2
If you’re looking to invest in residential property in North England, Manchester may be a more suitable option. compared to London, considering the lower cost of living and an enticing 6.5% annual yield.
Home to many start-ups, the city has been watching its population and economy expand. These two factors, in conjunction with an on-growing employment rate, determine the affluence of new residents, the student community, and tourism. With those factors, comes the demand for housing, creating the momentum to raise the earnings of property investment in Manchester.
The average property price is £214.500 and the average rental yield in Manchester is currently 6.5%, making it one of the highest-yielding cities in the UK for property investors.
Buy to let Liverpool
- 6.4% rental yield
- £1.245 average price per m2
Property prices are estimated to rise by 28% over the next four years. This provision gives Liverpool the edge as a prospective rental hotspot. Central postcodes are delivering the best rental returns and yields on the properties close to the Royal Liverpool University Hospital, as they can even go up to 10%.
The city’s plans for renovation are a very ambitious project that will for sure boost its potential, leading to a very auspicious future for investors. The average property price is £164.550 and the average rental yield in Liverpool is currently at 6.4%, making it one of the highest-yielding cities in the UK.
Buy to let Leeds
- 6.3% rental yield
- £1.920 average price per m2
Leeds is a top destination for the ones pursuing investment opportunities in long-term rentals. Property prices are low and rental income is up to speed, providing landlords with significant sources of income, especially considering that the majority of the population tends to rent instead of buy. This trendy city, famous for its nightlife and cultural offer, is also known for a very strong financial quarter.
Buy to let Nottingham
- 6.0% rental yield
- £1.470 average price per m2
If your investment strategy points towards student accommodation, Nottingham is where you should put your money. Home to two major universities (Nottingham Trent University and the University of Nottingham) as well as one of the biggest teaching hospitals in the UK (Queens Medical Centre), the city shows a great need for student housing. In case you’re looking for long-term tenants, affordability has also been a key factor in Nottingham’s rising population, contributing to a growing demand for rentals.
Buy to let Edinburgh
- 5.9% rental yield
- £2.669 Average price per m2
The increase of brand-new residential buildings in Edinburgh’s city centres creates a great opportunity for buy-to-let investors. The economy is expected to rise, which sure will translate into rental price growth.
Students, tourists, and families are a broad market to take into account when developing a property’s investment strategy in Edinburgh. The average property price in Edinburgh is £268.989.
Buy to let Birmingham
- 5.9% rental yield
- £1.837 Average price per m2
The forecasts for property investment in Birmingham are quite promising, as the average rent price is expected to rise 12% in the next five years.
The city is in continuous transformation and is affordable enough to attract and retain young professionals. Companies have found solid ground and new talent keeps moving from London. One or two-bedroom apartments rule the market and are a great deal, especially when served by the transportation network.
Buy to let Glasgow
- 5.3% rental yield
- £2.367 Average price per m2
Scotland’s most populated city is going to live up to its potential. A bursting cultural scene, a flourishing economy, and a booming student population have led to huge rental demand, turning Glasgow into a buy-to-let paradise. Sale prices are rising and rental returns are highly increasing, making it one of the most affordable places in the UK.
Buy to let London
- 4.6% rental yield
- £7.731 Average price per m2
The UK’s capital, and the world’s leading financial centre, attracts residents from all parts of the globe. House prices increase by the day and renting is in such high demand that it will always be a reliable source of income. Be aware that yields are lower in the big cities, where everything costs more, including your property expenses.
If you’re looking to buy a flat in London, and want to short-let it to ensure maximum flexibility for your own convenience, check our short-term rentals guide in London.
2. What is a good rental yield in the UK?
Yields fluctuate across the UK and even in the same city or region, depending on the postcode. Location, surrounding amenities, and prestige will determine rental prices and play a huge role in your revenue.
In the UK, a good yield is somewhere between 5% and 8%. Beware that London is a completely different scenario and that anything above 5% is considered a pretty good decent yield. For bigger yields, you should consider student housing. Smaller studio apartments are a cheaper investment and the perfect match for students and young professionals trying to establish themselves in a new city.
3. Why invest in property in the UK?
Buying real estate in the UK is a good investment because of the disparity between offer and demand. House prices are still affordable for buyers, but the demand for renting seems to continuously increase at a fast pace. This is noticeable mainly in cities with development and renovation, and have a high quality of living with good employment rates.
In comparison to other European countries, investing in property is much easier for foreign citizens, thanks to the benefits of a much more liberal economic policy. You won’t need British citizenship or a permanent residence permit. There are no real limitations of ownership rights for overseas investors. In fact, they share the exact same rights and obligations as the British.
As for returns, a strong well, and established economy, with the UK securing its position as Europe’s business-leading destination, it sustains a very stable investment background.
4. What is the UK’s tax on rental income?
The tax you pay from renting your property may fluctuate depending on how much you are profiting as well as on your own individual circumstances. It may be a case where you don’t make enough revenue to pay your taxes or you pay tax at a rate of 20%, 40%, or 45% on your rental income.
To calculate your rental income, you must subtract any allowable expenses from your total income. That said, do not forget to deduct costs of loan interests, mortgage, insurances, maintenance (not including improving works), utility bills, and professional services.
5. Short, mid or long-term?
Short-term rental is the perfect option for property owners in cities with all-year high tourism rates, higher rental rates, and flexibility.
Long-term rentals are a good solution for residential areas, renting big three and four-room houses for families, and smaller apartments for single tenants.
Is your property located close to a university? Students can guarantee you a minimum of 12 months of rent, and they may even increase their stay for the whole duration of the graduation or even further.
It is fundamental that your returns cover all your expenses, so you can make the most of your profits. Bearing that in mind, you must choose the renting modality that better fits your purposes.
6. Invest in the UK with GuestReady
Looking to buy investment property in the UK? Schedule a call with our experts in property investment and find out the estimated returns of your properties.