If rental income is your priority, should you invest in famous London—or could a less expensive UK city produce a stronger return?
For Nigerians and other overseas buyers, choosing a city based solely on popularity can be costly. Purchase price, achievable rent, tenant demand, service charges and ongoing expenses all affect what you actually earn.
This guide compares some of the best UK cities for rental yield in 2026 using the latest available average house-price and private-rent data.
What Does Rental Yield Mean?
Rental yield compares a property’s annual rental income with its purchase price.
For example, a £200,000 property generating £1,000 per month would produce £12,000 annually. Its gross rental yield would be:
£12,000 ÷ £200,000 × 100 = 6%
Gross yield does not deduct mortgage payments, service charges, management fees, insurance, repairs, tax or periods without a tenant. Your net return will therefore be lower.
1. Newcastle upon Tyne – Approximately 6.9%
Newcastle currently has one of the strongest indicative gross yields among major English cities.
According to the latest ONS local data, its average house price was approximately £211,000 in August 2026, while average monthly rent reached £1,220 in September.
That produces an indicative gross yield of approximately 6.9%.
Newcastle’s comparatively accessible prices may appeal to buyers seeking rental income without the entry cost associated with London. However, investors should examine individual neighbourhoods, tenant demand and property-management arrangements before buying.
2. Manchester – Approximately 6.4%
Manchester combines rental demand with a large student population, expanding business districts and a strong professional tenant market.
Its average house price was approximately £257,000, while average monthly rent reached £1,380. This suggests an indicative gross yield of approximately 6.4%.
Manchester may suit investors who want a balance between rental income, a recognised city and potential long-term demand. Central developments can, however, carry significant service charges that reduce net returns.
3. Nottingham – Approximately 6.4%
Nottingham offers a lower average entry price than Manchester while maintaining a similar city-wide gross yield.
The average house price stood at approximately £190,000, with average monthly rent of £1,015. This produces an indicative gross yield of around 6.4%.
Its universities, healthcare sector and working population support different tenant markets. Buyers should still investigate the exact postcode because performance can vary significantly across the city.
4. Liverpool – Approximately 5.8%
Liverpool remains attractive to investors seeking comparatively affordable property in a major regional city.
With an average house price of approximately £188,000 and monthly rent of £916, its indicative gross yield is around 5.8%.
The city has student, professional and family rental markets, but regeneration and tenant demand differ by neighbourhood. A low purchase price alone should never determine the investment decision.
5. Birmingham – Approximately 5.6%
Birmingham had an average house price of approximately £235,000 and average monthly rent of £1,106, indicating a gross yield of around 5.6%.
Its central location, universities, employment base and ongoing regeneration make it relevant to overseas investors seeking a large-city market outside London.
Before purchasing a city-centre apartment, compare the expected rent with its service charge, management cost and likely occupancy.
The calculations above use ONS September 2026 rents and August 2026 house prices. These are city-wide averages and provisional indicators—not guaranteed returns for a particular property. ons.gov.uk
Watch: Explore a UK property opportunity in one of the cities attracting overseas investors.
Is the City with the Highest Yield Always Best?
No. A high headline yield may be weakened by:
- Expensive service charges
- Frequent repairs
- Long periods without a tenant
- Weak resale demand
- High property-management costs
- Choosing the wrong neighbourhood or property type
A lower-yielding property in a well-connected location with dependable tenants may provide a more stable investment than a higher-yielding property with greater risk.
Review the latest ONS private-rent and house-price data and assess each property individually.
You can also explore UK properties available to overseas buyers through MercyHomesUK.
Frequently Asked Questions
What is a good rental yield in the UK?
There is no universal target. A suitable yield depends on the location, property type, financing costs and risks involved.
Which UK city currently has the strongest indicative yield?
Among the cities compared here, Newcastle has the highest city-wide indicative gross yield. Individual property performance may differ.
Is London good for rental income?
London offers high rents and international demand, but its higher purchase prices can produce lower headline yields than many regional cities.
Which UK City Should You Choose?
The best UK cities for rental yield in 2026 include Newcastle, Manchester, Nottingham, Liverpool and Birmingham—but the right city depends on your budget, preferred tenant market and long-term objective.
MercyHomesUK can help Nigerian and other overseas buyers compare suitable UK opportunities remotely and connect them with independent solicitors or mortgage advisers where required.
Ready to Buy UK Property from Nigeria or Overseas?
Whether you’re looking for a UK investment property, a home for your family, or need guidance on UK mortgage options for non-residents, MercyHomesUK can help you navigate the process from wherever you are.
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This blog is for general information only and does not constitute legal, financial, mortgage, tax or investment advice.
