According to recent research by HSBC, rental returns are growing at the fastest rate in Reading and Brighton, with yields now respectively 12.8% and 12.6% higher than last year. This is good news for buy-to-let investors who are looking for investment opportunities outside of the capital.

Average yields in Reading now stand at 5.48%, up from 4.86% last year, while in Brighton they stand at 6.17%, up from 5.68%. With an average Reading property currently priced at £207,934 and properties in Brighton standing at £242,535 these areas are certainly ones to watch. Landlords can expect to achieve a monthly rental income of £950 in Reading and £1,248 in Brighton.

Peter Dockar, head of mortgages at HSBC said, ‘Landlords are reaping the benefit as young professionals say goodbye to capital living in favour of more affordable commuter towns. House prices in these locations – while still out of reach for many first time buyers – are relatively affordable for landlords investing in property and the demand from young professionals has pushed up rents and driven up returns.’

However, it’s Southampton that continues to enjoy the title of the BTL hotspot for investors. Rental yields of 8.73% in the coastal town are currently the highest in the country. The city’s landlords benefit from relatively inexpensive house prices, as well as strong rental demand from seasonal workers, holidaymakers and students.

Manchester, Nottingham, Blackpool and Hull complete the top five locations with the best rental yield at 7.98%, 7.67%, 7.63% and 7.47% respectively. Manchester has climbed to second spot from 4th last year while Nottingham rises to 3rd from 5th as they both benefit from relatively low house prices but strong demand for rental property from large student and young professional populations.