This is according to the latest quarterly LendInvest Buy-to-Let Index which also found that four of the 10 highest rental yielding postcodes are to be found in Birmingham, followed close behind by 3 of the 10 in Glasgow with Ipswich and Liverpool also making it into the top 10.
Price Paid data from Land Registry shows that capital gains were 2.6% per year across the UK from 2010 to 2014. Yet areas in Manchester and Liverpool have actually experienced declines in house prices year on year.
Postcodes WC1, WC2 and N5 in London have the highest returns on investment yielding up to 25% year on year.
The highest house price increase during 1995-2014 has been seen in Hackney in London which experienced up to an 8 fold increase, closely followed by Kensington and Chelsea (7 fold increase).
Commenting on the results of the Index Christian Faes, CEO of LendInvest, said: "It was interesting to see the recent Bank of England report on the BTL market. The market is definitely buoyant. However, the Bank of England figures are a broad generalisation of the market. What we have achieved with the LendInvest Buy-To-Let Index is the ability to drill down into different parts of the country, and to get a very detailed view of the market in each location.
"The LendInvest Buy-To-Let Index is an invaluable tool for sophisticated Buy-To-Let investors, and it is freely available on our website."