The northern English city with an LS6 postcode currently offers landlords a yield of 10.79% while featuring a pool of available properties, at a median asking price of just north of £116,000.
The hotspot is followed by fellow northern cities Bradford (BS1), which promises yields of 10.33% and York (YO1) at 10.33%. Last in line of high-yielding property areas is Cardiff (CF24), where rental yields are about 7.6%.
Property areas in the south and Midlands however, fared less well, with Poole (BH13), in particular its luxury peninsula Sandbanks, coming out worst in the study at rental yields of 1.13%. Various London postcodes are yielding less than 2%, according to TotallyMoney.com.
The study suggested northern and Scottish investors had the best chances of realising a buy-to-let yield above the national average of 3.3%, while the average 2.9% buy-to-let yield for London postcodes is lower than any other UK city.
Indeed, the 10 lowest yielding postcodes, with the exception of Edgbaston and Holland Park in Birmingham, are all in Greater London, the south east and the south coast, it said.
However, even in the capital there are areas yielding above average returns, such as the Olympic district E20 at 5.9% and East Ham at 4.8%.
CEO Alastair Douglas said: “Due to rapidly growing property prices, London is often seen as the best place to invest in property. However growth rate isn’t always mirrored in rent prices.
“This research shows that investors looking for high yields on rental developments might see better returns from properties in the cities of northern England and Scotland.”
Industry has long looked to the north as the next buy-to-let hotspot. Bridging Finance Solutions managing director Steve Barber, for instance, who has been operating in the region for the past decade told Specialist Lending Solutions he expected an “extremely buoyant market” in the next five years.
Rival lender United Trust Bank recently said it saw “considerable potential” for further growth in the north and was looking to roll out its development and bridging finance solutions in the region.
The lender appointed former Barclays Bank senior real estate manager Steve Grant as property finance business development manager responsible for the roll-out.