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Revealed: best rental yield areas for buy-to-let

Landlords currently looking for the UK’s best buy-to-let areas should head north to places like Liverpool and Scotland, with new research revealing that they offer some of the highest buy-to-let yields, making them potentially the most lucrative hotspots for property investors at the moment. 

Properties in Liverpool appear to offer particularly good returns, with the L1 postcode offering an average rental yield of 10%, according to the study by credit experts TotallyMoney. 

Buy-to-let investors could easily acquire a property for an average of £90,000 and expect to support their investment with an asking rent of about £750 per calendar month.

Two Scotland postcodes make the top three, and they are Falkirk’s FK3 and Glasgow’s G52, returning 9.51% and 8.71% yields respectively. 

A total of nine Scottish areas feature in the top 25 of the best yields. 

In fact, 16 of the top 25 postcodes are in the North West, predominantly Liverpool and Scotland.

The North East also has some top performers. TS1 and TS3 in Cleveland rank fifth and 12th  respectively, while Sunderland features twice, in the SR8 and SR5 postcodes, while Gateshead’s NE8 has a 7.27% yield - putting it in 18th position.

The majority of the strongest UK postcodes return a yield of 7%. These include Leeds’ LS2 (7.92%), Cardiff’s CF43 (7.61%), Aberdeen’s AB11 (7.20%) and Lancaster’s LA14 (7.06%). 

All postcodes in the top 25 have property asking prices under the current UK national average of £232,710. 

Rank

Postcode

Postcode Town

Properties for Rent

Median Rental Value

Properties for Sale

Median Asking Price

Yield

1

L1

Liverpool

187

£750

368

£90,000

10.00%

2

FK3

Falkirk

30

£495

39

£62,450

9.51%

3

G52

Glasgow

46

£595

66

£82,000

8.71%

4

L11

Liverpool

55

£650

31

£90,000

8.67%

5

TS1

Cleveland

65

£425

34

£60,000

8.50%

6

KA1

Kilmarnock

68

£450

75

£64,995

8.31%

7

L6

Liverpool

153

£575

59

£85,000

8.12%

8

LE1

Leicester

176

£667

116

£100,000

8.00%

9

LS2

Leeds

111

£825

32

£125,000

7.92%

10

S1

Sheffield

219

£750

68

£115,000

7.83%

11

CF43

Cardiff

36

£425

35

£67,000

7.61%

12

TS3

Cleveland

60

£475

63

£74,975

7.60%

13

L2

Liverpool

115

£850

106

£135,000

7.56%

14

PA3

Paisley

42

£425

43

£68,500

7.45%

15

L3

Liverpool

282

£740

360

£119,950

7.40%

16

SR8

Sunderland

85

£450

143

£73,725

7.32%

17

G51

Glasgow

74

£595

31

£97,500

7.32%

18

NE8

Gateshead

148

£575

75

£94,950

7.27%

19

AB11

Aberdeen

173

£600

45

£99,995

7.20%

20

G67

Glasgow

57

£450

65

£75,000

7.20%

21

G32

Glasgow

46

£475

76

£79,995

7.13%

22

L4

Liverpool

136

£475

94

£80,000

7.13%

23

G21

Glasgow

30

£550

31

£92,995

7.10%

24

LA14

Lancaster

50

£500

128

£85,000

7.06%

25

SR5

Sunderland

46

£495

40

£84,950

6.99%

At the other end of the spectrum, a number of commuter belt areas have the lowest yields. 

At the very bottom is AL5 in St Albans. The average buying price for a property is £800,000, and asking rent is £1,300 per calendar month, which means a total yield of just 1.95%.

This puts it below Kensington’s W8 postcode in London, which still manages to squeeze out a 2.05% return for landlords even though average property prices are a hefty £1,962,500.

Other commuter spots in the bottom 10 include RG10 in Reading (2.26%), GU10 in Guilford (2.22%) and KT7 in Kingston upon Thames (2.20%).

Spokesperson for TotallyMoney, James McCaffrey, said: “Many existing and would-be landlords wonder if buy-to-let is still worth it. Our findings are another source to help property investors answer that question.

“The maps and data clearly show there are pockets of profit for landlord investment this year. And it seems that Scotland and the North are good places to start a buy-to-let property search.

“Landlords should always do their research before committing to a property purchase. Understanding current market trends is part of that. Making sure they’re financially prepared is another.

“To negotiate the best mortgage rates, investors need a clear knowledge of where they stand in the credit market.” 

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