The results are in – the UK’s top 25 buy-to-let postcodes, as well as some of the worst performing areas, have been revealed by TotallyMoney.
The overall message from the credit experts is that the UK’s buy-to-let market is in rude health, with many of the top performing postcodes generating 7%-8% yields for investors.
L1 in Liverpool is the UK’s top buy-to-let postcode, according to the research. It delivers a yield of 10%, made possible by a median rental value of £750 and an average property price of just £90,000.
Next up are Scottish locations FK3 in Falkirk and G52 in Glasgow, with respective yields of 9.51% and 8.71%. Average rents in FK3 are lower at £495, but a typical purchase price of just £62,450 means landlords can still generate impressive yields.
In G52, meanwhile, the median rental value is £595 and the average property price is £82,000.
The top five is made up by L11 in Liverpool and TS1 in Cleveland – both generating yields of over 8.50% for investors.
By far the most attractive investment regions are the North West (predominantly Liverpool) and Scotland, with 16 of the top 25 postcodes situated in these areas.
Another strong region is the North East, with TS1 (5th) and TS3 (12th) in Cleveland ranking highly. Sunderland featuring twice in the top 25 (SR8 and SR5) and Gateshead’s NE8 coming in 18th position with an average yield of 7.27%.
On the flipside, TotallyMoney says many of the weakest performing buy-to-let postcodes are in commuter belt areas. At the very bottom is AL5 in St Albans with an average yield of just 1.95%. This is due to a typical purchase price of £800,000 and a high average monthly rent of £1,300 per month.
Other areas generating poor returns for investors are London’s W8 postcode in Kensington (2.05%), Reading’s RG10 (2.26%), GU10 in Guildford (2.22%) and KT7 in Kingston-upon-Thames (2.20%).
“Many existing and would-be landlords wonder if buy-to-let is still worth it,” says James McCaffrey, TotallyMoney spokesperson.
He argues that the data clearly shows that there are ‘pockets of profit’ for landlord investment this year.
“Landlords should always do their research before committing to a property purchase,” says McCaffrey.
“Understanding current market trends is part of that. Making sure they’re financially prepared is another.”