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We all know that you have to pay for properties in the best postcodes, but which postcodes can provide the best yields for buy to let property investors?
Credit experts TotallyMoney have researched UK postcodes to find where the most profitable places are for buy to let investment.
Liverpool’s L1 tops the list, boasting a strong 10 per cent profit margin, smashing the 3 per cent yield many of the UK’s postcodes offer. In L1, landlords snap up a property for an average of £90,000 and support their investment with a significant asking rent of £750 per month.
But it’s not just Liverpool that’s doing well. Landlords may want to keep gazing North. Completing the top three is Falkirk’s FK3 and Glasgow’s G52, returning 9.51 per cent and 8.71 per cent yields respectively. And 16 of the top 25 postcodes are in the North West (predominantly Liverpool) and Scotland.
That said, the North East also has some top performers. TS1 and TS3 in Cleveland rank fifth and 12th respectively, while Sunderland features twice (SR8 and SR5), and Gateshead’s NE8 has a 7.27 per cent yield, putting it in 18th position.
The majority of the strongest UK postcodes return a yield over 7 per cent. These include Leeds LS2 (7.92 per cent), Cardiff’s CF43 (7.61 per cent), Aberdeen’s AB11 (7.20 per cent) and Lancaster’s LA14 (7.06 per cent).
It is also worth knowing which postcodes are providing the lowest yields for buy to let property investors.
Many well-known 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 month. Total yield: just 1.95 per cent.
This puts it below London’s W8 postcode (Kensington), which still manages to squeeze out a 2.05 per cent 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 per cent), GU10 in Guilford (2.22 per cent) and KT7 in Kingston upon Thames (2.20 per cent).
James McCaffrey of TotallyMoney commented: ‘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.’