Manchester has emerged as the most profitable location for rental property investors in England and Wales, delivering the highest average gross yields in the country, according to new analysis by property software provider Cohab.
The North West city recorded an average annual rental yield of 6.35%, driven by a combination of strong demand from students and young professionals, affordable property prices, and a buoyant local economy.
The findings are based on an analysis of government data across hundreds of local authorities.
Saveli Kotz, Chief Executive and Founder of Cohab, says: “Manchester has certainly been one success story highlighting how investment and job creation can drive prosperity across the rental market. For the nation’s landlords, the ability to maximise their investment remains imperative.”
AVERAGE RETURNS
The report places Merthyr Tydfil in Wales second in the rental yield rankings, with an average return of 6.28%. The former industrial town, located between Cardiff and the Brecon Beacons, has seen significant regeneration in recent years, contributing to growing rental demand.
Portsmouth (6.21%), Newcastle (6.02%) and Salford (5.91%) round out the top five, reinforcing the trend of strong yields in regional cities where property prices remain relatively accessible for investors.
FASTEST YIELD IMPROVEMENT
While the capital has traditionally struggled to offer attractive yields due to high property prices, the latest figures suggest a notable shift. Six of the ten fastest-improving areas for rental yields over the past 12 months are located in London, led by the City of Westminster, where average yields have increased by 1.36 percentage points to 4.38%.
STANDOUT LOCATIONS
Other standout boroughs include Kensington and Chelsea (up 1.08 points to 3.88%), Islington (up 0.74), Hammersmith and Fulham (0.73), Brent (0.71), and Hackney (0.66). The data suggests landlords in the capital may be starting to benefit from rising rents, even as price growth remains subdued.
Kotz adds: “Not only are there a wealth of areas boasting very strong yields in the current market, but we’ve also seen healthy yield growth over the last year, particularly across the London market.”
Outside the capital, Welsh markets continue to deliver steady yield growth. Merthyr Tydfil’s strong performance was matched by gains in Newport (up 0.71 percentage points to 4.90%) and Torfaen (up 0.57 to 5.28%), underscoring the appeal of affordable property stock in emerging rental markets.
BUY-TO-LET CHANGES
Despite ongoing legislative and tax pressures on the buy-to-let sector, the data points to continued opportunities for landlords to achieve competitive returns, especially in self-managed scenarios.
Kotz says Cohab’s newly launched self-management platform aims to support landlords in improving margins by cutting costs and reducing the administrative burden.
He says: “An estimated 60% of landlords already opt to self-manage their portfolio in order to streamline costs.
“Our free-to-use offering allows them to substantially reduce the admin associated with doing so. In doing so, we look forward to helping the nation’s landlords further maximise on the profitability of their portfolio, whilst also remaining fully compliant in what has become an increasingly turbulent space with respect to legislative and compliance requirements.”
