The UK’s top buy to let region has been revealed as Liverpool, according to new research.

Liverpool has a Rental yield of 8% once mortgage costs are removed and it’s combination of low average house prices and strong rents have helped the city take the top spot.

The average house price in Liverpool is £122,283 while rents are at £1,021 per month, according to mortgage provider Private Finance.

Nottingham is in second place with a rental yield of 5.6%, with Coventry in third (5.4%), Greater Manchester in fourth (4.3%) and Portsmouth (4.2%).

A number of changes have been introduced in the buy to let sector recently including tax changes, increases in stamp duty and a restriction to mortgage interest tax relief.

Read more: Rises in taxable profit to impact landlords

These changes have made it increasingly important for private landlords and buy to let investors to try to maximise Rental Yields to be better equipped to deal with rising costs.

Following the top five cities are Cardiff, Blackpool and Lincoln each with a rental yield of 3.9% with Bournemouth (3.8%) and Southampton (3.7%) rounding up the top 10.

Average annual interest only mortgage costs are significantly different between the top 10 cities, from £5,940 in Blackpool to £13,548 in Bournemouth.

Cities with higher housing and mortgage costs need greater levels of rental income to be a sustainable option for investors.

However, house prices and mortgage costs can be more influential than rental income when deciding which locations provide the best rental yields, the report revealed.

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The top 10 list for best rental yields includes six areas which have the lowest house prices.

In comparison, none of the locations with the top 10 highest average rents are buy to let hotspots.

“It’s not only the residential property market that’s all about location, location, location. Many landlords will treat property as a long term investment, looking for reward in the form of capital gain,” said Shaun Church, director of Private Finance.

“Succeeding in making a long term profit depends on buying an affordable property and being confident its value will appreciate at a higher rate than mortgage borrowing. However, for more immediate returns, landlords can optimise rental yields by choosing their buy to let location carefully,” he explained.

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