10th March 2021
The UK postcodes with the highest buy-to-let yields
When choosing a buy-to-let property, there are so many elements to balance in order to get the biggest return on your investment. Not only are you looking for a reasonably priced property that has the potential to be rented out either to an individual tenant or to a group, but you also want to ensure that the potential rental income of that property is strong enough to provide a profit.
One way of balancing these elements and calculating the potential yield on a property is to analyse the current yields being achieved by other landlords in the local area and, in order to help you find the more affluent areas of the UK, we’ve performed the research on your behalf. The following is a list of top postcodes that currently reap generous buy-to-let yields, with explanations as to why this may be, to help streamline your buy-to-let property search.
Unsurprisingly, areas with a considerable amount of students tend to be the areas of the UK offering the highest yield. University hotspots such as Liverpool, Middlesbrough and Newcastle are lucrative, buy-to-let safe bets, as consistent student term times and a regular flow of new students puts landlords in a strong position to advertise ahead of term to keep attracting tenants and ensure properties are occupied at all times. However, landlords should also consider postcode areas rich with schools and local amenities with good transportation links, as young professionals and families looking to rent a property typically consider renting based on what the location has to offer.
L7, L6 and L1
The UK’s most profitable postcode with a total yield of 11.92% at the time of research, is L7, the postal area representing the Merseyside region of Liverpool. This area of Liverpool also happens to be home to the Royal Liverpool University Hospital, Edge Hill station and Liverpool’s shopping centre and is a prime, close-central quarter of Liverpool. With both the University of Liverpool and Liverpool John Moores University a stone’s throw away from this rental hotspot, this area of Liverpool is a top location for soon-to-be students and young professionals looking for a less busy area of Liverpool, with a short commute into the city centre through accessible transport links. The L7 postcode is closely followed by L6, which has an average yield of 11.55% and the next highest average is from L1 at 6.87%, the postcode from central Liverpool.
Overall, if you’re considering purchasing a buy-to-let property to attract consistent tenants, L7 or L6 are our recommended areas to consider, as they both boast plenty of desirable residential qualities including schools, colleges, parks and plenty of local amenities.
TS1 and TS3
Just after Liverpool in the best buy-to-let areas of Britain, is Middlesbrough, with TS1 offering prospective landlords an average 10.56% yield, followed by TS3 bringing in 7.12%. Investing in a buy-to-let property in this area of Teeside is particularly valuable for landlords on smaller budgets, as average asking prices for this area falls considerably lower than most at just £66,879. With an average monthly rental value of £400-£500, this is the ideal investment opportunity to attract students and bring in a steady monthly rental income. TS1 is the ideal location for students too, as it is home to the central area of Middlesbrough, with Teesside University and The Cleveland Shopping Centre falling into this postcode. Along with Linthorpe Road, which plays host to all the nightlife Middlesbrough has to offer, with dozens of bars and restaurants populating the length of the road.
G51 and G52
One of the major cultural hubs of Scotland, Glasgow is home to art institutions such as the Scottish Opera, the Scottish Ballet and the National Theatre of Scotland and ranks third on our list of locations to consider when purchasing a buy-to-let property. G51 has an average monthly rental value of £867 per calendar month which, combined with an average property value of £115,372, gives an impressive rental yield of 9.02%. Falling behind this figure is the second Glasgow postcode, G52, with an average yield of 7.29% and a slightly lower rental value of £770 per calendar month. Both Glasgow postcodes, situated on the south side of the River Clyde, have excellent transport links in and out of the city, making it a popular area for students studying at the University of Glasgow.
NE1 and NE6
Another area that is highly attractive for potential landlords is Newcastle Upon Tyne. NE1 postcodes are close to both Newcastle University and Northumbria University, with this area being the prime central hotspot for students. With Newcastle University alone reporting 29,872 students enrolled for the academic 2020-2021 year, this area is particularly popular amongst students, as it contains both University campuses. As well as being home to the two main campuses of Newcastle, NE1 postcodes cover Newcastle Central Station, Eldon Square shopping centre, several museums and the picturesque quayside. Properties in this postcode cost around £184,382 and offer an average yield of 7.19%, with an average rental price of £1,104 per calendar month. The NE6 postal codes of Newcastle are slightly out of the central areas, but favoured amongst students due to their cheaper rental value than NE1, as an average rental value in this area is considerably lower at £949pcm. With an average property price of £149,122, this leaves landlords with a higher average rental yield of 7.64%. Depending on your investment budget, both areas offer particularly lucrative leads for landlords wanting to attract student and young professional tenants.
S1, LS2 and NG1
Outside of our top four high buy-to-let yield areas, there are three additional postcodes worth mentioning, S1 in Sheffield, LS2 in Leeds and NG1 in Nottingham. All achieving average yields of over 7%, these postcodes are classic examples of how purchasing properties in areas with high student populations can make for a good investment. Sheffield in particular, which has an average rental yield of 7.57%, has a student population of over 60,000 meaning that, with the right tenants, a rental property here is unlikely to sit vacant for any portion of the year.
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At SDL Property Auctions, we operate auctions online and offer properties for sale from all across the UK. We pride ourselves on bringing sales by auction into the mainstream as a lucrative alternative to traditional methods of investing in a buy-to-let property.
If you’re looking to purchase a property in one of our high buy-to-let yield postcode areas, simply use our Property Finder and search by location.