Manchester has taken top spot for the second year running as the best city in the UK for landlords to invest in.

Aldermore’s annual Buy to Let City Tracker reveals Manchester comes out on top for long-term capital growth, with house prices rising by 6.3%. The city boasts the highest share of private renters (32%) and one of the lowest vacancy rates (0.8%), sustained rental demand and limited supply. However, with short term yields at 7.2%, Manchester favours patient, long term investors.

The tracker highlights the ongoing investment potential within the private rental sector where the average rent per room has continued to increase from by 7.3% (£518 in 2024 vs £556 in 2025) while short-term returns increased from 6.9% in 2024 to 7.4% in 2025.

Glasgow

Glasgow, Coventry, Wigan, Nottingham, Liverpool, Birmingham, Portsmouth, Derby and Telford are all in the top 10.

Jon Cooper, director of mortgages at Aldermore (pictured right), says increased regulation and evolving tenant expectations mean landlords need to be far more hands-on, regularly reviewing their portfolios, reassessing yields and ensuring their properties remain competitive.

He adds: “For landlords prepared to adapt and take a long-term view, there are still resilient and attractive returns to be found.”

Reposit

Meanwhile, data from Reposit shows average rental arrears reached a new high of £2,281 in the first quarter of the year. However, with arrears increasing by just 2% year-on-year, it indicates that the rate of growth has slowed - a clear shift from the sharp rises seen in previous years when arrears surged by 27% between Q1 2023 and Q1 2024, followed by a further 23% increase between Q1 2024 and Q1 2025.

CEO Ben Grech says: “With the Renters’ Rights Act now in place and the abolition of Section 21 no-fault evictions, landlords are understandably becoming more cautious, given the reduced flexibility in how they manage tenancies.”

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