Manchester leads the way on rental yields, but London seeing largest improvements

That is according to Cohab, the property software solution for landlords, which analysed government data to estimate annual returns across local authorities.*

In Manchester landlords are making average annual yields of 6.35%, stronger than any other area. The North West city benefits from having a large student population as well as an influx of young professionals attracted to the area for its job market and culture.

The second best yielding region is Merthyr Tydfil in Wales at 6.28%, which sits between Cardiff and the picturesque Brecon Beacons National Park.After that comes Portsmouth on the South coast, at 6.21%, while rounding up the top five are Newcastle (6.02%) and Salford (5.91%).

London and Wales yields improve

While London isn’t associated with strong rental yields, annual returns are rapidly improving in some of the most sought-after areas of the city.

Yields have increased by 1.36% year-on-year in the City of Westminster, bringing them to a moderate level of 4.38%. They also rose by 1.08% in Kensington and Chelsea, though they still stand at a lower 3.88%.

But it’s not just the most prime areas that are seeing better returns, as London is home to six of the top 10 regions for improved yields.

On an annual basis yields have rapidly improved in Islington (0.74%), Hammersmith and Fulham (0.73%), Brent (0.71%) and Hackney (0.66%).

Outside of the capital yields saw major improvements in multiple areas of Wales, with a 0.89% increase in Merthyr Tydfil to 6.28%, a 0.71% rise in Newport to 4.90%, and a 0.57% uplift in Torfaen to 5.28%.

Founder and CEO of Cohab, Saveli Kotz, commented:

“Despite the government’s best efforts, the buy-to-let sector continues to offer an abundance of opportunity for bricks and mortar investors and 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.

Manchester has certainly been one success story highlighting how investment and job creation can drive prosperity across the rental market, but for the nation’s landlords, the ability to maximise their investment remains imperative.

Data Tables and sources

• *Current average yield and annual change across each area of England and Wales calculated using house price data from Gov UK and rental market values from the Office for National Statistics – January 2025 (Latest available).
• View the full data tables and sources here