Landlords could earn an additional £14,700 per year by renting out rooms on an individual basis, according to research by CIA Landlord Insurance.

The provider compared average rent costs for three-bed properties and single rooms in properties across the UK, to highlight which cities offer the best value for both landlords and tenants.

And it discovered that renting out rooms on an individual basis is usually the most profitable option for landlords, with Hull ranking as the most profitable location of all.

The average monthly cost of renting an entire three-bed property in the city works out as £287 per room, while the average cost of renting a single room is over £400 more expensive (£697 a month).

This means landlords could earn up to £1,230 more per month by renting out rooms on an individual basis, adding up to an additional £14,700 per year.

Sunderland is the second most profitable location, with landlords able to earn an additional £9,612 per year by renting out individual rooms, followed by Nottingham where they can earn an extra £7,740 per year.

However, there are drawbacks to renting out individual rooms, such as a higher turnover of tenants, more admin and potentially more repairs, although landlords could benefit from a higher overall return.

The top 10 cities where landlords can make the most profit by renting rooms out individually are:

1. Kingston upon Hull
2. Sunderland
3. Nottingham
4. Stoke-on-Trent
5. Derby
6. Bradford
7. Sheffield
8. Birmingham
9. Leicester
10. Coventry.

Renting out the whole property

Renting out an entire property is still the most profitable option for landlords in some areas of the UK, according to the research by CIA Landlord Insurance.

In London, for example, landlords can earn an extra £2,163 per month renting out an entire property rather than individual rooms.

The average monthly cost of renting a three-bed in London works out as £1,693 per room, whereas the average cost of renting a single room in a property is just £972 per month. This means landlords could earn on average an extra £2,163 per month by choosing to let their entire property.

Renting out an entire property is also the most profitable rental strategy for landlords in Edinburgh, Aberdeen and Manchester.

Cheapest cities to rent

Stoke-on-Trent is the cheapest city in the UK to rent a whole three-bed property, making it the ideal location for tenants looking to save on rent.

The average rent price for a three-bedroom home in Stoke is £843 per month, which is over £4,000 cheaper than the monthly cost of renting the same-sized property in London (£5,078).

Preston is the cheapest city for tenants wanting to rent by the room. The average monthly rent for a single room in a property is £439.60, which is over £500 cheaper than the cost of a single room in London (£972).