Property investors in Manchester are benefitting from the best rental yields across England and Wales, while London is seeing the largest improvements, according to the latest research from Cohab.

It analysed government data to estimate annual returns across local authorities. It found that in Manchester landlords are making average annual yields of 6.35%, stronger than any other area. Merthyr Tydfil in Wales is the second best-yielding region at 6.28%, followed by Portsmouth at 6.21%.

In London, annual returns are rapidly improving in some of the most sought-after areas of the city. Yields increased by 1.36% year-on-year in the City of Westminster, bringing them to a moderate level of 4.38%, and by 1.08% in Kensington and Chelsea, to 3.88%.

The capital is also home to six of the top 10 regions for improved yields. On an annual basis yields have rapidly improved in Islington (0.74%), Hammersmith and Fulham (0.73%), Brent (0.71%) and Hackney (0.66%).

In Wales, capital yields saw major improvements in multiple areas of Wales, with a 0.89% increase in Merthyr Tydfil to 6.28%, a 0.71% rise in Newport to 4.90%, and a 0.57% uplift in Torfaen to 5.28%.

Founder and CEO of Cohab, Saveli Kotz, says:“Despite the government’s best efforts, the buy-to-let sector continues to offer an abundance of opportunity for bricks and mortar investors. Not only are there a wealth of areas boasting very strong yields in the current market, but we’ve also seen healthy yield growth over the last year, particularly across the London market.”