According to Aldermore’s buy-to-let (BTL) city tracker, Bristol has risen two spots and Manchester has fallen from first to second compared to last year.
Coventry has climbed seven spots to third, Brighton has grown 10 spots to fourth position, while London fell three spots to fifth.
Cambridge, Portsmouth, Glasgow, Basildon and Milton Keynes rounded out the top 10, with Portsmouth, Glasgow and Basildon both entering the ranking this year by jumping 16, nine and three spots respectively.
The tracker analyses average total rent, the best short-term returns through yield, long-term return through house price growth over the past decade, the lowest number of vacancies as a proportion of total housing stock, and the percentage of the city population in the rental market to indicate BTL desirability.
Bristol tops list due to good rental prospects, long-term renters and few vacant properties
Aldermore said that Bristol has “good rental prospects, a high proportion of long-term private renters available and low number of properties currently vacant”.
The report added the growth on returns was an “attractive lure for landlords” with an annual increase of 6.6 per cent.
However, short-term yields sit at 4.4 per cent.
Manchester fell from the top spot to second place this year, with the average rent per room lower at £461 and the proportion of vacancies in properties lower at 0.9 per cent compared to the national average of 1.2 per cent.
Long-term returns stand at 6.1 per cent, with a “healthy market of tenants” available at 31 per cent.
It is also the first time that a Scottish city has entered the top 10 since the report was launched five years ago, with Glasgow in eighth place.
Glasgow has good rental returns for landlords at £471 and offers one of the highest short-term returns of 8.6 per cent, higher than the average of five-and-a-half per cent.
Wales remains at the bottom of the leaderboard, with Newport and Swansea remaining in 49th and 50th place due to lower rent returns, but long-term yields are more “promising”.
Cardiff climbed to 40th place, helped by a proportion of private rents and fewer vacant properties.
Rents continue to rise
The report shows that the average rent per room has steadily grown to £455, which is up from £432 in 2022 and £423 in 2021.
Research also showed that nine out of 10 landlords increased the rent they charge in the last 12 months.
Just under three quarters of landlords have seen a rise in tenant demand for their properties in the last year.
Jon Cooper, head of mortgages at Aldermore, said: “Landlords have experienced an unprecedented year with rising interest rates, rising inflation, all while navigating their way through property legislation changes. Yet, the demand for rental accommodation has never been so high.
He said: “Landlords play an important role in the UK economy, providing homes for those who are yet to get on the housing ladder or want to rent.”
Cooper added: “Usually, a few regions dominate the leadership board, but this year we see for the first time a wider range of areas making it into the top 10. We can see that each region is made up of multiple smaller markets with their own unique conditions and challenges.
“Landlords continue to do their research, working with their brokers to review their portfolios and ensure they are getting the best value for their properties, whatever obstacles may come their way.”
