Property investment in the wrong location can lead to low or even negative returns, according to new research which looks beyond gross rental yields. Investing in property can appear to be a very attractive option as in the current economic climate there are few investment sectors that offer both safe haven status and inflation beating yields.

However, the research from the property website Home.co.uk shows that the old adage  of location, location, location could not be more relevant when sinking capital into bricks and mortar.

Looking beyond gross rental yields, their analysts have calculated what they call a ‘real yield’ for the most popular rental locations across the UK that assesses the impact of changing capital values to produce what the firm believes is a more realistic view of rental yields and their investment potential.

The analysis is based on median asking prices and rents of typical two bedroom properties and combines changes in the capital values and gross rental yields. The current top 10 areas attracting the highest real yields are all in London, but the worst locations are to be found throughout the UK.

Its analysis report says that all of the worst performing areas attract negative ‘real yields’ and the information could prove very interesting reading for potential buy to let investors.

Whilst there are many reports of a North/South divide in the property market, six of the 10 worst performing areas are located in the South of England, including the relatively affluent area of Guildford.