Are you looking for the formula to success in property investing? Use our buy-to-let guide for 2023 to spot high-yielding, profitable prime locations to stay away from risky investments.
Since 2016, there has been an additional 3% stamp duty levy for anyone purchasing a second home. Therefore, a property investor will pay £9,000 more than a homeowner on a £300,000 purchase. Second homeowners and buy-to-let landlords in Scotland are required to pay an additional 4% in stamp duty.
No investment is without risk, but buy-to-let can be profitable to you if you have a long-term perspective. It’s not a get rich quick scheme, but if you go into it with your eyes open, you can make a solid income. Even if certain recent developments have made buy-to-let less appealing to some investors, it is still profitable when done well. Although rental yields have decreased, it’s important to keep in mind that capital growth is also a factor that makes investing in property very profitable. For this reason, we have examined properties all over the nation to determine where you can achieve the highest yield in 2023.
According to Natwest, as a rule of thumb, between 6% and 8% is considered to be a reasonable level of rental yield, therefore locations between or above this range have ranked in the top.
Top UK Locations for Rental Yield 2023
Leyburn has the greatest yield, with landlords able to take advantage of yields of 9.8%. Edinburgh and Paisley, with 6.9% and 6.7% respectively, are in second and third place. Leyburn is adjacent to the Yorkshire Dales National Park, and Edinburgh is a well-known university city, so landowners should anticipate a steady stream of prospective tenants.
Locations at the lower end of the scale such as York and London are now pulling in yields of around 5.5-5.9%.
| AREA | MEDIAN RENTAL VALUE | PROPERTIES FOR SALE | MEDIAN ASKING PRICE | YIELD |
| Leyburn | £1,850 | 42 | £227,500 | 9.8% |
| Edinburgh | £1,800 | 1,716 | £315,000 | 6.9% |
| Paisley | £700 | 262 | £126,000 | 6.7% |
| Aberdeen | £700 | 2,362 | £132,000 | 6.4% |
| Ripon | £1,540 | 138 | £287,500 | 6.4% |
| Gateshead | £850 | 1,435 | £165,000 | 6.2% |
| Glasgow | £1,000 | 2,019 | £200,000 | 6.0% |
Leyburn
Leyburn is one of the few locations pulling a close to 10% yield, which right now is hard to come by following the changes in the market over the last 3 years.
Leyburn is located in the heart of the Yorkshire Dales National Park and is encircled by gorgeous landscape and charming settlements. The community is renowned for its weekly, traditional market that features locally produced goods. This location is perfect for both tourists and locals due to its assortment of independent stores, cafes, and bars. Additionally, Leyburn holds various events throughout the year, including the Leyburn 1940s weekend, the Dales Festival of Food and Drink, and the Leyburn Sprints Classic Car event. Leyburn is an excellent destination for travellers who want to see and experience the finest of the Yorkshire Dales because of its stunning surroundings and lively community.
Moving to the Yorkshire Dales, to areas such as Leyburn you are likely to get more space for your money, with beautiful views and picturesque walks close by which makes for an attractive rental for landlords in the UK.
Edinburgh
At a 6.9% yield, and being a renowned city for culture, universities, and beautiful landscape, Landlords should take the opportunity to consider this location for their buy-to-let investment.
Edinburgh is the capital city of Scotland and is located in the southeastern part of the country. It is known for its stunning mediaeval and Georgian architecture, rich history, and vibrant cultural scene. The city is home to many famous landmarks and attractions, including Edinburgh Castle, the Royal Mile, and the National Museum of Scotland.
Edinburgh is also renowned for its world-class festivals, which attract millions of visitors every year. The Edinburgh International Festival, the Edinburgh Fringe Festival, and the Royal Edinburgh Military Tattoo are just a few of the many events that take place in the city.
In addition, Edinburgh is a hub for education and research, with several prestigious universities and research institutions located in the city. It is also a major financial centre and has a thriving business community.
Overall, Edinburgh is a beautiful and dynamic city that offers something for everyone. Whether you’re interested in history, culture, or modern amenities, making it the perfect rental location.
Paisley
Paisley is located in the west-central Lowlands of Scotland, situated on the banks of the River Cart. It is the largest town in the historic county of Renfrewshire and is located just 7 miles west of Glasgow, known for its universities and wealth of amenities. The town is known for its rich history, particularly for its weaving industry, which was once the largest in the world.
Today, Paisley is a thriving town with a population of over 76,000 people and is home to a variety of attractions, including the Paisley Abbey, the Coats Observatory, and the Paisley Museum and Art Galleries. The town is also renowned for its vibrant cultural scene, with numerous music, theatre, and arts festivals held throughout the year. Additionally, Paisley is a popular destination for shopping, with a range of high street and independent retailers, as well as several shopping centres. Overall, Paisley is a charming and dynamic town with a rich heritage and plenty of things to see and do, and coming in at a yield of 6.7%, it currently stands in third place for landlord yields across the UK.
The UK’s Worst Buy-to-Let Yield Locations 2023:
The lowest performing locations for yield are as follows:
| AREA | MEDIAN RENTAL VALUE | PROPERTIES FOR SALE | MEDIAN ASKING PRICE | YIELD |
| Bangor | £534 | 188 | £242,500 | 2.6% |
| Settle | £688 | 22 | £322,500 | 2.6% |
| Ilkley | £895 | 152 | £389,500 | 2.8% |
| Skipton | £715 | 129 | £295,000 | 2.9% |
| Knaresborough | £825 | 184 | £325,000 | 3% |
| Kilmarnock | £525 | 135 | £190,000 | 3.3% |
| Gloucester | £895 | 708 | £295,000 | 3.6% |
| St Albans | £1,725 | 582 | £575,000 | 3.6% |
| Falkirk | £650 | 115 | £210,000 | 3.7% |
| Leicester | £865 | 2,587 | £280,000 | 3.7% |
| Bradford | £650 | 1,568 | £193,664 | 4.0% |
| Sunderland | £600 | 1,016 | £174,973 | 4.1% |
| Ipswich | £898 | 894 | £260,000 | 4.1% |
| Lancaster | £795 | 373 | £185,000 | 5.2% |
| Liverpool | £800 | 6,516 | £185,000 | 5.2% |
| Sheffield | £850 | 1,258 | £190,000 | 5.4% |
| Kingston Upon Thames | £2,600 | 1,112 | £575,000 | 5.4% |
| Sheffield | £850 | 1,258 | £190,000 | 5.4% |
| Birmingham | £1,100 | 4,612 | £238,998 | 5.5% |
| York | £1500 | 892 | £327,498 | 5.5% |
| Guildford | £1,995 | 697 | £425,000 | 5.6% |
| Otley | £1,295 | 44 | £267,250 | 5.8% |
| London | £3,000 | 53,302 | £610,000 | 5.9% |
Kilmarnock, Gloucester, St Albans, Falkirk, and Leicester are the 5 locations that don’t reach the 4% yield bracket.
Reasons for low yield:
- Low demand for rental properties
- High property cost, low monthly rental
- Areas of high commuting into large cities such as St Albans
- Poor transport links
- High crime rates
- Lack of amenities in the area
As of 2023, the UK house price index reports the average UK property costing £254,624, and the majority of locations performing the worst in terms of yield are all sitting above this price, bar Sheffield, Liverpool, Lancaster, Sunderland, Bradford, and Falkirk.
St Albans has one of the lowest buy-to-let yields at 3.6%, which may be explained by the fact that it is paradise for commuters to London. The typical asking price is £575,000, while the median monthly rent is £1,725; as a result, the yield is poor.
Rental Yield in London:
Currently, all rental yield in London is below the 6% threshold that Natwest consider to be a reasonable yield, with Newham and Wandsworth being the closest to that benchmark at 5.7% each.
| AREA | MEDIAN RENTAL VALUE | PROPERTIES FOR SALE | MEDIAN ASKING PRICE | YIELD |
| Newham | £2,050 | 326 | £430,000 | 5.7% |
| Wandsworth | £3,072 | 1,035 | £650,000 | 5.7% |
| Merton | £2,200 | 509 | £500,000 | 5.3% |
| Sutton | £1,625 | 852 | £367,500 | 5.3% |
| Croydon | £1,600 | 2,854 | £380,000 | 5.1% |
| Greenwich | £2,000 | 577 | £470,000 | 5.1% |
| Barking | £1,650 | 965 | £400,000 | 5.0% |
| Kingston upon Thames | £2,500 | 1,103 | £595,000 | 5% |
| Hackney | £2,450 | 577 | £600,000 | 4.9% |
| Hammersmith | £3,445 | 1,196 | £837,500 | 4.9% |
| Camden | £3,250 | 765 | £825,000 | 4.7% |
| Ealing | £2,400 | 659 | £610,000 | 4.7% |
| Richmond upon Thames | £2,400 | 1,272 | £625,000 | 4.6% |
| Southwark | £3,354 | 778 | £875,000 | 4.6% |
| Barnet | £2,500 | 566 | £672,500 | 4.5% |
| Islington | £3,034 | 962 | £810,450 | 4.5% |
| Lambeth | £3,358 | 1,691 | £895,000 | 4.5% |
| Lewisham | £1,650 | 530 | £437,500 | 4.5% |
| Hillingdon | £1,750 | 153 | £475,000 | 4.4% |
| Redbridge | £1,600 | 2,519 | £450,000 | 4.3% |
| Westminster | £4,500 | 1,266 | £1,250,000 | 4.3% |
| Enfield | £1,638 | 330 | £485,000 | 4.1% |
| Fulham | £3,250 | 1,928 | £950,000 | 4.1% |
| Kensington | £4,767 | 1,930 | £1,400,000 | 4.1% |
| Harrow | £1,663 | 1,223 | £495,000 | 4% |
| Hounslow | £1,695 | 1,154 | £535,000 | 3.8% |
| Chelsea | £4,723 | 2,181 | £1,675,000 | 3.4% |
Under the 4% mark we can see that Hounslow and Chelsea take the bottom two positions, with Chelsea being the lowest current yield in London for 2023, at 3.4%
Rental Yield in Yorkshire:
As per the 6-8% rule stated by Natwest, the following two locations are ranked top in Yorkshire:
| AREA | MEDIAN RENTAL VALUE | PROPERTIES FOR SALE | MEDIAN ASKING PRICE | YIELD |
| Leyburn | £1,850 | 42 | £227,500 | 9.8% |
| Ripon | £1,540 | 138 | £287,500 | 6.4% |
The following Yorkshire locations don’t hit the 6% mark:
| AREA | MEDIAN RENTAL VALUE | PROPERTIES FOR SALE | MEDIAN ASKING PRICE | YIELD |
| Otley | £1,295 | 44 | £267,250 | 5.8% |
| York | £1500 | 892 | £327,498 | 5.5% |
| Sheffield | £850 | 1,258 | £190,000 | 5.4% |
| Leeds | £910 | 2,827 | £234,995 | 4.6% |
| Halifax | £653 | 308 | £170,000 | 4.6% |
| Hebden Bridge | £950 | 37 | £260,000 | 4.4% |
| Bradford | £668 | 1,450 | £185,000 | 4.3% |
| Hull | £600 | 1,570 | £170,000 | 4.2% |
| Rotherham | £650 | 379 | £185,000 | 4.2% |
| Barnsley | £625 | 362 | £180,000 | 4.2% |
| Northallerton | £825 | 137 | £240,000 | 4.1% |
| Huddersfield | £598 | 422 | £173,750 | 4.1% |
| Keighley | £625 | 163 | £185,000 | 4.1% |
| Harrogate | £995 | 518 | £300,000 | 4% |
| Filey | £725 | 121 | £225,000 | 3.9% |
| Batley | £700 | 324 | £220,000 | 3.8% |
| Bridlington | £638 | 363 | £200,000 | 3.8% |
| Pontefract | £750 | 222 | £240,000 | 3.8% |
| Thirsk | £860 | 73 | £275,000 | 3.8% |
| Dewsbury | £735 | 316 | £230,000 | 3.8% |
| Easingwold | £925 | 49 | £299,995 | 3.7% |
| Wetherby | £1,095 | 145 | £365,000 | 3.6% |
| Boroughbridge | £1,043 | 105 | £345,000 | 3.6% |
| Doncaster | £550 | 803 | £185,000 | 3.6% |
| Whitby | £825 | 129 | £275,000 | 3.6% |
| Scarborough | £607 | 531 | £200,000 | 3.6% |
| Beverley | £775 | 302 | £275,000 | 3.4% |
| Malton | £725 | 78 | £252,500 | 3.4% |
| Bedale | £750 | 43 | £275,000 | 3.3% |
| Pocklington | £830 | 61 | £325,000 | 3.1% |
| Knaresborough | £825 | 184 | £325,000 | 3% |
| Skipton | £715 | 129 | £295,000 | 2.9% |
| Ilkley | £895 | 152 | £389,500 | 2.8% |
| Settle | £688 | 22 | £322,500 | 2.6% |
Skipton, Ilkley, and Settle don’t even reach 3%, making them the worst performing locations across Yorkshire overall. The worst performing yields range between 2.6% and 5.8%.
Rental Yield in Scotland:
Scotland has four of the top six rental yielding locations in the UK. We were curious to find out where else delivers an impressive performance.
Here are the top performing locations in Scotland for rental yield:
| AREA | MEDIAN RENTAL VALUE | PROPERTIES FOR SALE | MEDIAN ASKING PRICE | YIELD |
| Edinburgh | £1,800 | 1,716 | £315,000 | 6.9% |
| Paisley | £700 | 262 | £126,000 | 6.7% |
| Renfrew | £825 | 131 | £155,000 | 6.4% |
| Aberdeen | £695 | 2,375 | £134,999 | 6.2% |
| Livingston | £950 | 28 | £185,000 | 6.2% |
| Dundee | £948 | 261 | £185,000 | 6.1% |
| Glasgow | £1,000 | 2,019 | £200,000 | 6.0% |
Here are the worst performing locations in Scotland for rental yield:
| AREA | MEDIAN RENTAL VALUE | PROPERTIES FOR SALE | MEDIAN ASKING PRICE | YIELD |
| Linlithgow | £753 | 26 | £252,500 | 3.6% |
| St Andrews | £1,225 | 59 | £395,000 | 3.7% |
| Falkirk | £650 | 115 | £210,000 | 3.7% |
| Dunfermline | £795 | 121 | £240,000 | 4.0% |
| Inverness | £825 | 219 | £220,000 | 4.5% |
| Oban | £800 | 24 | £200,000 | 4.8% |
| Stirling | £1,113 | 74 | £274,500 | 4.9% |
Linlithgow, St Andrews, and Falkirk are the lowest 3 locations across Scotland in terms of rental yield. They don’t reach the 4% mark with the rest of the locations scoring under 5% which is significantly lower than the benchmark of 6% according to Natwest.
Rental Yield in Wales:
Swansea is currently the only city in Wales hitting the 6% benchmark, at 6.3% yield. Known for its university, again landlords have the opportunity here to have a steady flow of prospective tenants here who attend the university, which could provide the opportunity for consistent income.
| AREA | MEDIAN RENTAL VALUE | PROPERTIES FOR SALE | MEDIAN ASKING PRICE | YIELD |
| Swansea | £1,104 | 989 | £210,000 | 6.3% |
| Cardiff | £1,150 | 2,555 | £285,000 | 4.8% |
| Newport | £900 | 1,076 | £250,000 | 4.3% |
| Wrexham | £688 | 307 | £215,000 | 3.8% |
| Bangor | £534 | 188 | £242,500 | 2.6% |
Bangor is currently way below 3% standing at 2.6%, putting it as the lowest rental yield in Wales.
How we did the maths:
We analysed towns across the UK using Realyse and Home.co.uk that both specialise in property data. We used the information to provide a report designed to help property investors, or those looking to start a property portfolio. The buy-to-let yield was then calculated by using the median monthly rent, divided by the median asking price. In total, we assessed 204,126 properties across the UK, Yorkshire, and Scotland, and of these properties, we found 66,453 to be rental properties, and 137,673 to be on the market.
By leveraging the insights derived from this dataset, property investors can assess the viability of expanding their portfolio or initiating their first investment venture. While the current market conditions may dissuade someone from entering the property space, ensuring you are vigilant regarding the trajectory of the industry, can help you in the long run, providing you are prepared to weather the economic storm. Ensure you engage in comprehensive research of the benefits and drawbacks of property investment, and solicit the help of experts in the property field, in order to make well-informed decisions.
Andrea Rozario of Bower Home Finance says:
‘’Property values in the UK have historically shown long-term growth, providing the potential for capital appreciation. However, it is crucial to be aware of the risks involved. Property prices can fluctuate, and there is no guarantee that values will always rise. Market conditions, such as changes in interest rates, legislation, and taxation have recently made buy-to-let as an investment increasingly more difficult, and these factors have impacted rental yields and profitability. Maintaining a property and managing tenants can also be time-consuming and costly, with potential issues such as vacancies, repairs, and challenging tenants. Adequate research, careful financial planning, and proactive management are essential to mitigate these risks and pave the way to a more successful buy-to-let investment.’’
‘’Investors over the age of 55 needing to raise money may choose equity release as part of their financial strategy. Clearly this would need considerable thought, understanding of the costs, and careful assessment of all options. This process requires qualified specialist advice to ensure all the aspects are examined, but this does not rule out that for some landlords, it could be a very good solution.’’
