Where are the best buy to let hotspots in 2026?

Every property investor wants to know which cities are best for investment, and Aldermore Bank's Buy to Let City Tracker, published annually, is a recent index to check out the results from the latest data. It draws on data from official government sources, including the ONS, the Census and other official housing statistics, and uses five robust indicators to assess the desirability of each city from a buy to let perspective:

• Average monthly rent per room
• The short-term yield for a new buy-to-let purchase
• The average property price increase over the last 10 years
• The size of the private rental market
• The proportion of vacant rental properties

Headline figures for 2024 to 2025 show the average rent per room increased by 7.3%, and the average yield has gone up from 6.9% to 7.4%, continuing an upward trend.

The top four cities are unchanged from last year’s tracker:
 

1. Manchester - Although short-term yields are slightly below average at 7.2%, this is one of the leading locations for long-term capital growth and has been the fastest-growing market outside London in percentage terms for more than a decade. It has the highest share of private renters, at 32% of the market, and one of the lowest vacancy rates of 0.8%, indicating an excellent supply/demand ratio that supports a solid long-term investment prospect for investors.

2. Glasgow - The real benefit for landlords in Glasgow is ongoing rental profit, with an average yield of 9.9% - one of the highest returns in Britain.

3. Coventry - Scores highly because it combines strong yields, rental demand and long-term house price growth.

4. Wigan - Wigan stands out for its exceptionally low vacancy rate and reliable capital growth, making it attractive for landlords seeking stable returns

“Unlike previous years, this year’s Buy to Let City Tracker has seen noticeably less reshuffling within the top ten, suggesting the market is beginning to stabilise. There’s no doubt that the operating environment has become more complex [with] increased regulation and evolving tenant expectations…however, the fundamentals remain supportive. Demand for well-located rental homes continues to outstrip supply in many cities, rental income has held firm year-on-year, and competition for quality stock remains high.” - Jon Cooper, director of mortgages at Aldermore.

Completing the top ten investment hotspots (change in position from last year) are the following:

5. Nottingham (+2)

6. Liverpool (+5)

7. Birmingham (+1)

8. Portsmouth (-2)

9. Derby (+12)

10. Telford (+5)

Which ‘hotspot’ is right for you?

When you’re looking at where to invest, one of the key things to think about is whether your main objective is ongoing rental returns or capital growth over time. For example, while Manchester is top of Aldermore’s table overall with excellent house price growth, Glasgow offers landlords a 2.7% higher yield, which could make it a more attractive hotspot if your priority is generating rental income.

And while indices like this are a good place to start if you’re new to investment, it’s important to spend some time analysing the specific area before you buy any property to make sure the investment fundamentals are solid. That includes:

• Is tenant demand outstripping the supply of rental accommodation, and is that trend likely to continue?
• Is there healthy wage growth in the local economy?
• Is there ongoing investment from both government and private companies in infrastructure and business?
• Does the local authority have policies that support landlords and the Private Rented Sector (PRS)?

Finally, it’s very helpful if you can also get a good deal on the purchase price of your investment. If you can buy something at less than the true market value, that built-in equity immediately boosts your overall returns and can give you greater flexibility on financing in the short to medium term.

Search for an investment property

Whether you’re making your first investment or are an experienced landlord, our sales and lettings experts are on hand to help you understand the local market and find a property that best meets your investment objectives. Just get in touch with your nearest branch to speak to one of the team.  

And if you’d like to discuss financing for your investment, you can easily make an appointment to speak to our partners at Embrace Financial Services or chat with an adviser via WhatsApp.

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