Northern England, Midlands and Scotland postcodes offer investors a higher average rental yield than the South of England, according to a new report.
Compiled by comparison site TotallyMoney, the report showed that the LS6 postcode in Leeds had the highest rental yield in September on 10.79%, followed by BS1 in Bradford and YO1 in York, which generated 10.33% and 9.73% respectively.
Generating high demand from a population of students and young professionals, the average monthly rent for the LS6 postcode stands at £1,044 – the fourth highest figure in the top 10 list.
LS6 also had the sixth highest average asking price in the top 10, with properties in the area valued at £116,115.
According to the report, it is the UK’s northern regions, and in particular Yorkshire, that are commanding the largest increases for rental yields nationally.
Liverpool, Manchester, Sheffield, Huddersfield and Cardiff also featured in the top 10 for rental returns, with locations in each of the towns and cities generating rental yields in excess of 7.6% on average – far above the national average of 3.3%.
The lowest yielding location in the report was found in the Dorset town of Poole, with properties in the BH13 postcode generating an average yield of just 1.13%.
London postcodes also featured prominently in the bottom 10 locations for rental returns with four locations – N21, W8, N2 and N6 – averaging rental incomes as low as 1.38%.
CEO of TotallyMoney, Alastair Douglas, said that the report demonstrates that whilst the rapidly growing property prices in the capital can make the city appear to be the best place to invest, the rental return in the city do not always reflect the fast capital growth.
Mr Douglas said: ‘This research shows that investors looking for high yields on rental developments might see better returns from properties in cities of northern England and Scotland.’
The demand for rental properties in the UK also remains high, with the Association of Residential Lettings Agents reporting earlier this week that the number of prospective tenants per letting branch increased in September and is now at the highest number since February 2015.