A leading data insight company has revealed the best places in the UK to buy an investment property.

Address Intelligence has been on the hunt for the UK’s best areas for investors and found that the average return on investment from letting out a property in the UK is 5%, but this varies drastically when broken down city by city.

According to its findings, the top 10 places to invest in a rental property are: Sunderland, Blackburn, Durham, Blackpool, Oldham, Cleveland, Liverpool, Wigan, Bolton and Manchester.

Investing in a rental property in Sunderland can earn an investor 7.27% back in rental payments in year one, the research found, with average monthly rent of £697. It would take an investor 14.2 years to pay off their property.

When split by property type, the data found that a terraced house in Sunderland makes the greatest return, with a semi-detached and bungalow coming in second and third.

Terraced housing in Blackburn, Blackpool and Cleveland also made the list, while a detached house in Sunderland was tenth on the list, making the Wearside port city the best place to buy an investment property across most property types.

Sunderland, often viewed as one of the most neglected and left behind cities in the UK, struggling to awaken from its post-industrial slumber, has in recent years seen a massive increase in both public and private investment. It’s estimated that, by 2024, over £1.5 billion will have been invested in a bid to transform the city centre.

The ‘evolving city centre’ has brought with it many new job opportunities, making Sunderland a more desirable place to live, according to Address Intelligence.

The city also has a large student population – being home to the University of Sunderland and its approximately 15,000-strong intake – which is likely to make it attractive to property investors with student housing particularly profitable in normal times as the property can be rented out on a room-by-room basis.

Sunderland has also received far more acclaim and international attention thanks to its starring role in the hit Netflix documentary Sunderland ‘Til I Die, which documents the highs and lows of the club and its fans.

Blackburn, another booming industrial hotbed which has fallen on harder times in recent decades, has also received significant investment in recent times, with the newly renovated Cathedral Quarter central to its transformation. The town now boasts a host of new offices and refurbished college and university campuses.

In third place is the picturesque riverside city of Durham, famous for its university and stunning cathedral, which has one of the highest rental values of anywhere in the UK, offering up an opportunity for property owners to make £873 per month per house. Like Sunderland, it has a sizeable university population, while many graduates decide to stay put even after university.

By contrast, the research found the bottom 10 places to invest in a rental property in the UK are:

1. West London
2. Llandrindod
3. St Albans
4. Watford
5. Hereford
6. Bromley
7. Cambridge
8. Dorchester
9. Slough
10. North West London

With property prices being extremely high, it comes as no surprise that West London is the least profitable place to buy a rental property in the UK. The average house there is valued at £930,790, meaning it would take an investor 27 years of rental income to pay off their property.

Llandrindod, a small town in Wales, also sits at the bottom of the list, despite (or perhaps because of) it being recently voted in the top 5 happiest places to live in the UK. With this popularity in mind, property prices are steep, and an investor can expect to only earn a 3.7% return per year based on the average annual rental income of £8,361.

When split by property type, the lowest rate of return across the whole of the UK is for a detached house in historic St Albans. Investors in the cathedral city – known as Verulamium during its Roman heyday – will only earn a 3.5% return each year. What’s more, with the average house valued at £983,979, it’s one of the most expensive places to purchase a property the UK.

You can see the full list below.

1. Sunderland
2. Blackburn
3. Durham
4. Blackpool
5. Oldham
6. Cleveland
7. Liverpool
8. Wigan
9. Bolton
10. Manchester
11. Newcastle
12. Doncaster
13. Halifax
14. Cardiff
15. Sheffield
16. Huddersfield
17. Wakefield
18. Bradford
19. Stoke on Trent
20. Telford
21. Warrington
22. Wolverhampton
23. Darlington
24. Hull
25. Chester
26. Swansea
27. Preston
28. Nottingham
29. Coventry
30. Dudley
31. Leeds
32. Walsall
33. Romford
34. Peterborough
35. Birmingham
36. Colchester
37. Newport
38. Medway
39. Brighton
40. Llandudno
41. Southend
42. Crewe
43. Luton
44. Lincoln
45. Northampton
46. Milton Keynes
47. Stockport
48. Derby
49. East London
50. Dartford
51. Southall
52. Portsmouth
53. Bristol
54. Carlisle
55. Lancaster
56. South East London
57. Leicester
58. Ilford
59. Canterbury
60. Plymouth
61. Norwich
62. Oxford
63. Croydon
64. Truro
65. Southampton
66. Bath
67. Enfield
68. Bournemouth
69. Swindon
70. York
71. Sutton
72. West City London
73. Ipswich
74. Gloucester
75. Guilford
76. North London
77. Chelmsford
78. East City London
79. Harrow
80. Twickenham
81. Redhill
82. Tonbridge
83. Worcester
84. Hemel
85. Harrogate
86. Shrewsbury
87. Stevenage
88. Exeter
89. Kingston
90. Taunton
91. Salisbury
92. Reading
93. South West London
94. Torquay
95. North West London
96. Slough
97. Dorchester
98. Cambridge
99. Bromley
100. Hereford
101. Watford
102. St. Albans
103. Llandrindod
104. West London

Contact the team at Opal Property or on 0203 355 8785 if you are looking to buy or sell a property.