Lowest rental yields found in Cambridge and London areas
Analysis of Zoopla data reveals Cambridge has the lowest gross rental yield among major UK cities at 4.7%, with London close behind at 5.1%. Northern cities like Sunderland offer significantly higher yields, highlighting regional disparities for buy-to-let landlords.
A recent study based on Zoopla data has identified the UK locations with the poorest returns for buy-to-let landlords, focusing on average gross rental yields. Cambridge registers the lowest yield among major cities at 4.7%, despite rents there being over £500 cheaper per month than in London. London itself ranks third-lowest with an average gross yield of 5.1%, though some outer London boroughs such as Barking and Dagenham, Newham, and Bexley offer better yields ranging from 5.8% to 6.22%.
At the other end of the spectrum, Sunderland boasts the highest average gross yield at 9.3%, which is notably 1% higher than any other UK city. Rents in Sunderland are less than half of those in London, averaging £659 per month. Other northern cities including Glasgow, Liverpool, and Newcastle also feature prominently among the top ten highest-yielding locations. Regionally, the North East leads with an average yield of 7.9%, closely followed by Scotland and the North West.
Detailed yield disparities across UK cities
The data highlights a clear north-south divide in rental yields. While southern cities like Cambridge and London have lower yields, northern cities and parts of Scotland provide landlords with higher returns relative to property values. The North East’s 7.9% average yield outperforms many southern regions, reflecting lower property prices combined with reasonable rental levels.
Within London, yields vary significantly by borough. Outer boroughs such as Barking and Dagenham (6.22%), Newham (6%), and Bexley (5.8%) provide more attractive returns than central areas. This suggests that landlords seeking better yields might consider these locations, though factors such as tenant demand, property condition, and future growth prospects must be weighed carefully.
The higher yields in northern cities come with trade-offs. Property prices in southern England, including London and Cambridge, have generally experienced faster growth over the past decade compared to northern regions. This means landlords in the south may benefit from greater capital appreciation, even if rental yields are lower. Conversely, northern landlords may enjoy stronger immediate rental returns but face slower property value growth.
Implications for landlords and investors
For landlords and buy-to-let investors, these findings underline the importance of balancing yield with other investment objectives such as capital growth, tenant profile, and market stability. High yields in northern cities may be appealing for income-focused landlords, but they should consider local economic conditions and tenant demand to avoid long void periods or rent arrears.
Landlords operating in low-yield areas like Cambridge and London might focus on long-term capital growth and tenant retention strategies. In contrast, those investing in northern cities should ensure their properties meet local standards and tenant expectations to maintain occupancy and rental income.
Property advisor Said Derzi from Landlord Resource advises caution when relying solely on yield figures. He recommends cross-checking multiple independent data sources, including housing portals and lending trackers, to get a comprehensive view of investment potential. He also warns that city-level data can be too broad for investment decisions, and landlords should examine neighbourhood-level details to identify the best opportunities.
Regional trends and market considerations
The north-south yield gap reflects broader economic and demographic trends. Northern cities often have lower property prices due to historically slower economic growth and less demand pressure. However, they can offer more affordable housing to tenants and better rental returns relative to investment.
Southern cities, particularly London and Cambridge, attract higher demand and command premium prices, which compress rental yields. These areas may appeal to landlords prioritising capital gains and stable tenant demand, including professionals and students.
Landlords should also consider local regulatory environments, licensing requirements, and property standards, which can vary widely across regions and affect profitability. For example, some northern councils have introduced selective licensing schemes that impose additional compliance costs.
What landlords should consider now
Landlords assessing their portfolios or planning acquisitions should analyse yields alongside other metrics such as capital growth forecasts, tenant demand, and local market conditions. Using detailed, up-to-date data sources is essential to avoid overpaying for low-return properties or missing opportunities in emerging markets.
It is also advisable to monitor changes in local regulations, including landlord licensing and property standards, which can impact operating costs and legal obligations. Keeping accurate records and maintaining compliance will help protect rental income and avoid penalties.
Landlords may benefit from segmenting their investment strategy by region, balancing higher-yield northern properties with growth-focused southern assets. This diversification can help manage risk and optimise overall portfolio performance.
Supporting landlords with data and compliance tools
The Landlord Association (TLA) offers resources and support to help members understand rental yield data and regional market trends. TLA’s new property management and compliance platform, ORBIT, currently in BETA testing, aims to assist landlords and letting agents in organising property records, managing rental documentation, and accessing compliance resources. ORBIT’s tools for recording inspections, repairs, and communications can be particularly useful in meeting regulatory requirements and maintaining property standards.
Membership of TLA provides access to practical information and guidance on evaluating investment opportunities, monitoring regulatory developments, and maintaining compliance across different regions. This support is valuable for landlords seeking to optimise returns while managing risks associated with varying yields and market conditions.
Exploring TLA membership and ORBIT BETA access can help landlords stay informed and organised as they navigate the complexities of the UK rental market.
Looking ahead, landlords should continue to track yield trends alongside broader economic indicators and regulatory changes. Being proactive in portfolio management and compliance will be increasingly important in a market with diverse regional dynamics and evolving landlord responsibilities.
Sources: Landlord Today
TLA - The Landlord Association