Lower house prices translate into higher yields for landlords in northern England and Scotland, according to our data.
Rochdale in Greater Manchester topped the table for the most lucrative place in which to be a landlord, with low property prices and rents in a two-bedroom home of £738 translating into gross annual yields of 9%.
At the other end of the scale, the commuter hotspot of St Albans offered the lowest returns at just 3.7%, according to Zoopla.
Annabel Dixon, spokesperson for Zoopla, said: “Despite the challenges facing the sector, yields - particularly in North England and Scotland - match up well against other forms of investment.
“It’s no surprise that towns further south provide lower yields. House price growth has slowed, but property is still considerably more expensive in these locations, meaning that even with higher rents, the returns are more limited for landlords.”
Where are the best buy-to-let towns?
While Rochdale topped the poll for the best buy-to-let returns, Blackpool was not far behind offering yields of 8.6%, followed by Glasgow at 8%, with Wigan in fourth place and Middlesbrough coming fifth.
Not only were all of the top 10 towns in northern England or Scotland, but they all had house prices that were significantly below the national average, contributing to the higher yields.
Middlesbrough had the lowest house prices on the list at just £84,728, offering gross yields of 6.9% despite average monthly rent on a two-bedroom property coming in at only £489.
Where are the worst performing buy-to-let towns?
Outside of London, towns within commuting distance of the capital offered some of the lowest buy-to-let yields, largely due to high house prices.
Although rent on a two-bedroom property in St Albans averaged £1,209 a month, typical property prices of £397,424 contributed to a yield of only 3.7%.
Hereford offered the third lowest yields at 3.9%, reflecting low rents of only £635, despite a two-bedroom property in the town costing just £194,052.
What about London?
Unsurprisingly, high house prices in London put pressure on the rental yields buy-to-let investors could expect to make.
Despite this, there were still pockets of opportunity in the capital.
By contrast, returns were lowest in Hackney at just 3.3%, despite rent on a two-bedroom home costing an eye-watering £1,933 a month.
Top 3 takeaways
1. Northern England and Scotland provide the best returns for buy-to-let landlords
2. Rochdale in Greater Manchester topped the table with gross annual yields on a two-bedroom property averaging 9%
3. The commuter hotspot of St Albans offered the lowest returns at just 3.7%
You may also be interested in...
Phil Spencer's top tips: How to make the most of a property viewing