Buy to let in Derby
2026 Market Data & Investment Analysis
Gross Yield
5.5%
Annual rent / price
Median Home Price
£195,000
As of 2026-Q1
Median Monthly Rent
£900
Per month
Population
260,000
+0.3% / yr (5y avg)
Estimates based on median market data. Actual returns depend on your specific property. Source: UK Land Registry / ONS, 2026-Q1.
Calculate your rental yield in Derby
Pre-filled with Derby's median values. Adjust to match your specific property.
Property Details
Total acquisition cost before taxes
HOA, insurance, property management
% of time the property is empty
% of purchase price (e.g. 2% = 2)
Rule of thumb: 1% of purchase price/yr
Results
Gross Rental Yield
5.54%
Net Rental Yield
3.03%
Cap Rate
3.03%
Monthly Cash Flow
£492.50
Annual Cash Flow
£5,910.00
Derby rental market at a glance
Median Home Price — 5-Year Trend
Median Monthly Rent — 5-Year Trend
Derby presents a compelling mid-market rental investment opportunity, characterized by strong gross yields of 5.5% paired with notably affordable entry prices around £195,000. This yield-to-price ratio substantially exceeds most UK regional averages, suggesting the market has not yet experienced the speculative price inflation seen in stronger performing regions. The 3.8% vacancy rate indicates healthy market balance with sufficient tenant demand to maintain consistent occupancy without desperate landlord competition, positioning Derby as a genuine cash-flow investment rather than a speculative capital appreciation play.
The city's rental demand is underpinned by several institutional anchors: the University of Derby maintains a significant student population requiring accommodation, while the East Midlands Railway headquarters and substantial manufacturing sectors (historically aerospace and rail engineering) provide stable employment for working professionals. The ongoing regeneration of the city centre, including the Pride Park expansion and riverside developments, has attracted younger demographics and created new residential demand nodes. Additionally, Derby's strategic location on the London-Manchester corridor via the Midland Main Line provides commuter accessibility to larger employment centres, a factor often undervalued in yield calculations.
However, the concerning 0.3% five-year annual population growth signals structural demographic challenges that could constrain long-term rental demand growth. Unlike northern growth corridors like Manchester or Leeds, Derby faces stagnant population expansion, meaning investor returns will likely derive from yield rather than capital appreciation. The city's economic diversification beyond traditional manufacturing remains incomplete, creating vulnerability to sector-specific downturns and potentially limiting the influx of high-earning professionals who typically drive premium rents.
What type of investment market is Derby?
Derby presents challenges with both modest rental yields and limited population growth. Investors need to carefully analyze specific neighborhoods and property types to find opportunities that outperform the market average.
✓ Strengths
- •Exceptional gross rental yield of 5.5% provides substantial monthly cash-flow returns, particularly attractive for income-focused investors seeking alternatives to sub-3% yields in London and South East markets
- •Sub-£200,000 median prices enable portfolio diversification and leverage optimization, allowing investors to acquire multiple properties with equivalent capital compared to higher-priced regional markets
- •Established institutional demand drivers including University of Derby student accommodation needs, rail and aerospace sector employment, and East Midlands Railway headquarters presence create multiple tenant source pools
- •Strategic geographic positioning on London-Manchester transport corridor and proximity to East Midlands Airport supports commuter demand and business travel-related short-term rental opportunities
! Risks
- •Stagnant population growth of only 0.3% annually suggests limited organic demand expansion, indicating future rent increases will likely track inflation rather than exceed it significantly, constraining wealth-building potential beyond yield returns
- •Historic economic over-reliance on manufacturing and rail sectors creates vulnerability to industry-specific downturns; aerospace and rail engineering employment could contract without equivalent diversification into tech, finance, or services sectors
- •Relatively low absolute property values (£195,000 median) may attract lower-quality tenant demographics and landlord competition from amateur investors seeking quick returns, potentially increasing management complexity and tenant quality issues
- •Limited evidence of major new commercial or residential development projects comparable to Manchester Spinningfields or Leeds city centre regeneration suggests slower appreciation trajectory and potentially weakening tenant quality migration over 5-10 year periods
Key Metrics
How does Derby compare to nearby cities?
Derby vs Nottingham: 0.2 percentage point difference in gross yield.
| City | Median Price | Median Rent | Gross Yield | Pop. Growth |
|---|---|---|---|---|
| Nottingham, England | £200,000 | £950 | 5.7% | +0.5% |
| Leicester, England | £210,000 | £980 | 5.6% | +0.6% |
| Sheffield, England | £195,000 | £900 | 5.5% | +0.4% |
| Coventry, England | £220,000 | £1,000 | 5.5% | +0.7% |
| Birmingham, England | £215,000 | £980 | 5.5% | +0.8% |
Investor Takeaway
Derby suits conservative, yield-focused investors prioritizing monthly cash-flow over capital appreciation—particularly those seeking portfolio diversification, BTL refinancing opportunities, or steady IRR returns in the 6-8% range. The optimal strategy involves acquiring properties near institutional anchors (University of Derby halls proximity, city centre locations near transport links) targeting professional tenants and student house-shares with premium rental rates above the £900 median. The critical factor to monitor is whether the city's regeneration projects (Pride Park, riverside development) succeed in attracting younger, higher-earning demographics; if population growth remains flat or declines, rental growth will stagnate and yields will compress as property values may fall, potentially undermining the current 5.5% yield advantage that drives investment appeal.
Common questions about investing in Derby
Is rental investing profitable in Derby?▾
What is the average rental yield in Derby?▾
How does Derby compare to Nottingham for investors?▾
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