Best Places To Invest In Property UK

Most "best places to invest" lists send you straight to Manchester, Liverpool or Birmingham. They are solid markets, but they are also crowded, competitive and increasingly expensive to enter. What rarely gets a mention is the cluster of East Midlands cities and market towns sitting quietly between them, offering some of the strongest rental yields in the country at a fraction of the price.

Heather Smail has spent over 16 years investing and developing across Nottingham and Derby, £106 million developed over 16 years. This guide is built on that ground-level experience, not desk research. Below, we focus on the markets we actively deliver in, look at the wider East Midlands towns worth watching, and set out how to think about choosing between them.

What Makes A Location Good For Property Investment?

Before comparing towns and cities, it helps to know what you are actually looking for. The best investment locations tend to share a handful of traits.

Rental yield is the starting point. It tells you how much income a property generates relative to its purchase price, and it is the number most investors compare first. Alongside yield, you want genuine tenant demand, ideally from more than one source such as students, young professionals and families, so your portfolio is not overly reliant on one group.

Regeneration and infrastructure spending matter just as much. Areas receiving investment in transport, town centres or employment tend to see both rents and property values climb over time. Affordability closes the loop. A lower entry price means a smaller deposit, easier financing and more room for your yield to work in your favour.

What Is A Good Rental Yield In The UK?

Rental yield is your annual rental income expressed as a percentage of the property's value. Gross yield is the income before costs, while net yield accounts for mortgage payments, management fees, maintenance and void periods.

As a general benchmark, a gross yield between 5% and 8% is considered good in most parts of the UK, with anything under 4% viewed as below average. All yield figures below are indicative and sourced from recent 2026 market data — they are a guide to relative performance, not a promised or guaranteed return on any individual property.

Where We Deliver: Nottingham, Derby And Loughborough

This is where Heather Smail Property Group has direct, on-the-ground experience sourcing, financing, developing and managing property. Everything below reflects markets we know street by street, not desk research.

Nottingham

Nottingham consistently ranks among the strongest yielding cities in the East Midlands. City-wide gross yields average in the region of 6 to 7%, with student-heavy postcodes such as NG7 (Lenton and Radford) reaching averages of around 9%, and well-run HMOs in these areas pushing higher still. Average property prices remain well below the England average, which keeps deposits accessible for first-time landlords.

Demand here is driven by two large universities, a growing life sciences sector and a city centre that continues to attract young professionals. But Nottingham is also one of the most tightly regulated HMO markets in the region, which is exactly where local expertise earns its keep. An Article 4 Direction covers the city, meaning planning permission is required to convert a family home into a small HMO (3 to 6 unrelated occupants), and a citywide Additional Licensing scheme means most HMOs of any size need a licence, not just the larger ones. A Selective Licensing scheme also covers most privately rented homes across large parts of the city. Buying a property without checking both its planning status and its licensing position is one of the most common mistakes we see investors make here.

Derby

Derby offers one of the most affordable entry points among the region's core cities, with average prices sitting well below the England average. Gross yields typically run in the 5 to 7% range, with city-centre postcodes such as DE1 averaging close to 6%.

Rolls-Royce, Toyota and Alstom anchor Derby's economy, providing the kind of long-term skilled employment that keeps void periods low. A city-centre regeneration programme running into the billions is also reshaping the housing and commercial landscape, adding a longer-term growth story on top of the income case.

Derby's regulatory picture is different from Nottingham's and needs to be read on its own terms. An Article 4 Direction has applied since 2025 across a large part of the central area, meaning planning permission is required to convert a family home into an HMO. As things stand, Derby City Council does not operate an Additional or Selective Licensing scheme, so mandatory licensing (for HMOs with 5 or more occupiers) remains the main licensing requirement though this is worth rechecking before any purchase, as councils in the region have been extending licensing coverage in recent years.

Loughborough

Loughborough punches above its weight thanks to its university, home to close to 20,000 students studying sport, engineering and business. That creates strong, reliable demand for shared housing and smaller flats, though HMO conversion here comes with its own Article 4 Direction and licensing rules, which we cover in detail in our dedicated guide to HMO investment in Loughborough.

Its proximity to both Nottingham and Derby means investors already active in our core markets can treat Loughborough as a natural extension, spreading tenant risk across a wider catchment area without stepping outside the region we know.

Wider East Midlands Markets We're Watching

The towns below are not areas where we currently have the same depth of local delivery experience as Nottingham, Derby and Loughborough. We're including them because they are genuinely worth understanding as part of the wider East Midlands picture, and because they represent areas we are actively assessing for expansion. Treat this section as market intelligence rather than a track record.

Leicester — Yields range widely by postcode, with areas close to the city centre reaching above 7%. Two universities and a young, fast-growing population have created sustained pressure on the private rental sector, and regeneration around the Waterside area is bringing new homes and commercial space into the city.

Lincoln — One of the most affordable cities in the East Midlands. Its university and cathedral city status give it a steady, if smaller, tenant pool, and rail links to Nottingham and Newark make it a convenient addition to a wider portfolio.

Mansfield and Ashfield — Recognised for high yield potential, helped by direct rail links to Nottingham, a growing Amazon fulfilment presence and town centre regeneration.

Chesterfield — In the middle of a large regeneration programme covering its town centre, retail space and employment hubs, with a rail link to London under two hours.

Kettering, Corby and Wellingborough — Historically overlooked Northamptonshire towns, all offering average house prices below the county benchmark, with Corby in particular undergoing significant regeneration.

Newark and Grantham — Sitting on the East Coast Main Line with fast connections to London, both towns are part of a government Plan for Neighbourhoods funding commitment aimed at revitalising town centres.

Worksop and Bassetlaw — Sharing in the same regeneration funding, with affordability relative to nearby Nottingham and Sheffield making it an accessible entry point for smaller budgets.

Bolsover — Some of the lowest entry costs in Derbyshire, forming part of the wider Derbyshire investment corridor linking to Chesterfield and Derby.

Ilkeston and Erewash — Sits between Derby and Nottingham, offering commuter appeal without the price tag of either city.

If any of these areas fit your strategy, we're happy to talk through what we're seeing just be aware this is early-stage assessment on our part, not an area we currently manage property in day to day.

Choosing Between Established Cities And Emerging Towns

Cities like Nottingham, Derby and Leicester offer deeper tenant pools and more liquidity if you ever need to sell. Market towns such as Mansfield, Chesterfield and Newark tend to offer lower entry prices and higher headline yields, but with a smaller, more concentrated tenant base.

Neither approach is right or wrong. Many experienced investors build a portfolio that blends both, using cities for stability and smaller towns for income. Where you don't yet have local relationships or delivery capability, the right move is usually to partner with someone who does, rather than going in cold.

How We Help: Acquisition Through To Refinance

Rather than leaving you to weigh up single lets, HMOs and turn-key developments on your own, we run one managed process from start to finish, built around our core Nottingham, Derby and Loughborough markets.

It starts with sourcing using our local relationships to find property that fits your budget and strategy, often before it reaches the open market. From there we handle acquisition and financing, connecting you with our broker, solicitor and accountant network so the purchase moves without you having to project-manage it yourself.

Where a property needs work, our development team architects included handles the refurbishment or conversion, with planning and licensing compliance built in rather than bolted on afterwards. Once the property is let, our management service takes care of tenant vetting, rent collection and ongoing compliance. And where the numbers support it, we help clients plan a refinance to release equity and put it to work on the next property, rather than leaving capital sitting idle in a single asset.

This is the model behind our own £106 million developed over 16 years, and it's what we bring to every client relationship, whether you're buying your first HMO or expanding an existing portfolio across Nottingham, Derby and Loughborough.

Ongoing Education

For clients who want to build their own property knowledge alongside their investment, Heather Smail also runs the Property Action Network, a separate membership community offering courses and support for people starting out in property. It sits apart from our investment and management services, and isn't a source of yield or performance figures it's a place to learn, not a track record to invest against.

Ready To Talk?

If you'd like to explore what property investment could look like across Nottingham, Derby or Loughborough, get in touch to book a call with the team and talk through your goals directly with Heather Smail Property Group £106 million developed over 16 years.

FAQs

What is the best place to invest in property in the East Midlands? 

Nottingham and Derby offer the strongest combination of yield, affordability and tenant demand within the areas we deliver in directly, with Loughborough a strong complementary option for HMO investors. Towns further afield, such as Mansfield and Chesterfield, are worth watching given fresh regeneration funding, though they sit outside our current core delivery area.

What is a good rental yield for buy-to-let in 2026? 

A gross yield between 5% and 8% is generally considered strong. Several East Midlands postcodes perform at or above the top of that range, though actual returns depend on the specific property, financing and running costs figures quoted here are indicative, not guaranteed.

Is Nottingham a good place to invest in property? 

Yes, though it comes with some of the most active HMO regulation in the region. Nottingham combines below-average property prices with strong rental yields, supported by two universities, but an Article 4 Direction and citywide Additional and Selective Licensing schemes mean planning and licensing checks are essential before buying.

Is Derby a good place to invest in property? 

Derby offers accessible entry prices and steady yields of around 5 to 7%, backed by major employers like Rolls-Royce and Toyota. An Article 4 Direction has applied since 2025, though as of now Derby does not run Additional or Selective Licensing schemes this is worth rechecking before purchase, as local rules can change.

How much deposit do I need for a buy-to-let property? 

Most buy-to-let mortgages require a deposit of between 25% and 40% of the purchase price, though this varies by lender and property type.

Are HMOs a good investment in the East Midlands? 

HMOs can deliver stronger returns than standard single lets, particularly in university towns, but they require more active management and strict adherence to local licensing and planning rules, which vary significantly even between neighbouring cities like Nottingham and Derby.

Which East Midlands towns are getting regeneration funding? 

Chesterfield, Mansfield, Newark and Worksop are among the towns receiving government funding through the Plan for Neighbourhoods programme, though these are areas we are monitoring rather than currently managing property in.

Is it better to invest in a city or a market town? 

Cities offer deeper tenant pools and easier resale, while market towns often provide lower entry prices and higher headline yields. Many investors combine both to balance income and stability.