The Smartest Places to Invest in UK Property in 2025

Investing in property in the UK remains a profitable decision, especially when you choose the right location. Whether you’re just getting started as a buy-to-let investor or have an established portfolio, selecting somewhere that yields promising returns should be a key part of a winning investment strategy. 

Typically, the warmer spring weather is a peak season for property searches, and new and active investors and established landlords might be looking at specific places where renting is buoyant for strong buy-to-let returns and sustainable long-term capital asset growth. This guide explores the most promising areas for buy-to-let investors looking to maximize their returns in the current market.

Why Does Location Matter for an Investment Property?

From Airbnbs and residential HMOs to private buy-to-lets or student houses, there are multiple types of properties to invest in. Yet, if you’re starting to build a portfolio or an experienced landlord, you’ll be aware of the timeless mantra that ‘location, location, location’ matters, and whether it still rings true or indeed remains relevant in today’s market. 

In recent years, there have been market movements in some locations due to a combination of factors, such as changing work patterns, infrastructure developments, and shifting demographic trends. Property experts agree that the sentiment for the market is positive with a significant increase of 9.1% seen in rental values over the past year. 

However, according to collective sources such as JLL, Savills and Zoopla, the most promising cities for rental price growth in the coming years are Manchester, Birmingham and Edinburgh. Large cities and London rentals remain promising and continue to attract movers thanks to ample job opportunities, lower-cost rentals and thriving cultural scenes.

Where are the Best HMO Locations in the UK?

With HMOs and flat developments being a lucrative investment option for landlords, it’s worth thinking about which locations show the most potential. HMOs tend to be popular for investors in areas that have the highest demand for shared housing on top of offering good transport links and employment opportunities.

However, before embarking on your HMO investment journey, you’ll need to be aware of what an Article 4 Direction is. Although you might have ear-marked an ideal property for conversion and flat letting, some specific Local Authorities have the right to accept or deny the change of one property use of class into another. With that in mind, these are the current UK locations with Article 4 Directions in place.

On a positive note, if you’re looking for places to invest in an HMO, reports suggest that the North East, North West, and the Midlands are regarded as optimal regions with strong anticipated yields and high returns. The North East leads the table thanks to having the highest average yield at 15.4% although Sunderland, Burnley, and Newcastle remain hidden gems due to their high HMO returns. 

While it’s not surprising that London dominates the market share with 20.6% of investments due to its population size, the South East achieves the highest annual rental income from HMO investments at £46,041 but this needs to be considered in relation to that substantially higher initial investment. To summarise the HMO data per location, investors can expect a 37.0% annual return on their investment in the North East compared to London’s 15.4%.

Where are the Best Buy-to-Let Locations in the UK?

When an investor looks at a location before deciding whether to invest there, they should consider the past performance of properties there, current predicted returns and the likelihood of returns being profitable in the future. Aside from the potential of a UK location, it then becomes important to review the following variables of a successful buy-to-let opportunity, including: property prices, rental yields, tenant demand, transport, employment opportunities, population growth and housing affordability.

With those factors built into your decision of where to invest, these are today’s best places for a buy-to-let in the UK: 

• Birmingham
• Derby
• Leeds
• Bradford
• Manchester
• Sheffield
• Liverpool
• Newcastle
• Leicester
• Nottingham
• Bristol
• Glasgow 
• Edinburgh 

While these locations offer promising opportunities, investors should carefully assess individual properties, local amenities, and demographics, such as student or work-age populations before making purchasing decisions. The following trio of major cities offers a brief guide on why certain cities do come out on top when it comes to buy-to-let investing.

Birmingham

As the UK’s second-largest city, Birmingham remains a strong contender for property investors. The completion of major infrastructure projects has enhanced the city’s appeal, with the Paradise development and Smithfield regeneration transforming the city-centre and are part of why this is a great place to invest in. The city’s large student population ensures consistent demand for quality rental accommodation.

Manchester

More recently, Manchester came out as the leader in the Aldermore’s Buy-to-Let City Tracker with Glasgow, Coventry, Wigan, and Bristol following closely behind as the rest of the top five. This is thanks to the city’s robust job market, fuelled by its growing tech and creative sectors. New developments in areas like Ancoats and Salford Quays are particularly attractive, with rental yields averaging 6-7%.

Edinburgh

Scotland’s stunning capital, Edinburgh, is popular with tourists and students alike, and 2025 is a prime time for investors. This beautiful city has a compelling combination of affordable housing stock and good yields. The return on your investment can be healthy with one-bed and two-bed flats reporting a yield of 6.2% and 6.3% respectively, rising to 6.6% to 6.9% for two-bed and three-bed homes.

Understanding Rental Yields 

Investing in property as a buy-to-let or any other basis is all about achieving a good yield as a fixed income and long-term capital growth. While 7% is considered a reasonable rental yield on your investment, some reputable sources provide returns of up to 15% from profitable UK properties.

Generally speaking, no one would buy an investment property based on rental yield alone, because of the wealth of other factors that help to make a buy-to-let profitable in a certain location and in the long-term. As a buy-to-let landlord, the rent you receive from tenants is crucial so when you’re calculating whether a property is a good investment you’ll want to consider whether the location is somewhere you’re likely to find reliable tenants. 

Your yield will also vary depending on whether the property is near a station or in a city-centre, but the size of the property and the cost of managing it will also need to be taken into account. Carefully analyse local supply-demand dynamics, as areas with housing shortages but strong population growth are good investment opportunities. 

Hotspots for Healthy Returns

Researching local economic indicators, employment trends, and infrastructure developments can highlight emerging hotspots before prices surge. Areas with strong rental demand, university towns, and locations benefiting from regeneration projects often deliver superior returns. 

Reports by Zoopla highlight several UK cities that consistently deliver exceptional rental yields of over 8% for property investors with standout locations being Sunderland, Aberdeen, and Burnley last year. Of Zoopla’s highest-achieving locations for best yields in the UK, the top 17 are also all in the North of England where house prices are considerably lower.

Similarly, certain regional property investment dynamics will play a part in determining healthy yields on buy-to-let investments in the UK. This variation underscores the importance of looking beyond traditional investment hotspots. In turn, differentiating the types of property you invest in can also impact your investment performance, such as:

• Houses in Multiple Occupation (HMOs): Typically achieve higher rental yields by maximising income through multiple tenancies
• Holiday rentals: Can generate premium rental income, although they require more active management and may experience seasonal void periods
• Student housing: A strong performer in university towns and cities

Promising Investment Opportunities and Variable Factors

The UK offers diverse investment opportunities across regions with varying potential returns and market conditions. If you’re researching the market and searching in the location you know and prefer, it’s worth considering the variables of a particular place. For instance, you’ll want to consider whether road networks are good, the options to travel by train and on reliable bus routes. Properties near major transport hubs command premium prices and maintain strong tenant demand. Thorough research and local market knowledge remain essential. 

Learning from Experience

For investors looking for their next HMO or buy-to-let investment in the UK, knowing the area well can help just as much as focusing your investment strategy. Choosing a high-performing location can make all the difference when it comes to achieving healthy rental returns and long-term capital appreciation. 

If you are concerned about your lack of knowledge or first-hand experience of working with your Local Council or planning authority, and are keen to avoid those areas with Article 4 Directions (mentioned before), HMO Architects have a wealth of experience working with 180+ councils.

If you’re considering getting into property investment or would like some advice, book a property strategy call today. With the right approach and location, property investment will continue to offer attractive returns when evaluating potential investment locations.