The report from the buy-to-let arm of Lloyds banking group advised investors to head north, where properties are much more affordable and yields are nearly 1% higher than those available in the traditional investment location of central London.
Investors were found to be offered better yields across the whole of the north, with both the north west and north east offering returns of 6.4%. This figure outscores the 5.5% annual returns available in central London and the yields of 5.9% in outer London.
While, central London was found to offer large capital gains due to house price rises, these high property prices mean that yields in the capital were lower than any other region throughout the UK, data from BM Solutions showed.
Despite the high capital gains in London, the low price point for properties in the North West coupled with the high rental yields means that economically, the region represents a much wiser investment choice.
The index showed that the average UK rental yield stood at 6.2%, below the yields recorded in the north east and north west, while also reporting that over a third of landlords across Britain have experienced an increase in tenant demand over the last three months, with 10% claiming that it had risen significantly.
BM Solutions found that landlords often have long-term tenants in place, with the average tenancy period lasting for 2.4 years; 9% of those surveyed were found to stay for much longer, residing in the rental property for over five years.