University Cities Offer Highest Investment Property Yields

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New research finds that university cities offer landlords the highest yields on buy to let investments, despite the sector as a whole feeling squeezed.

TotallyMoney’s twice-yearly research and analysis of the UK’s best and worst buy to let yield postcodes discovered that university cities offer the best returns for landlords, who are currently feeling the pinch due to changes in legislation to tax relief. The analysis, which covered over 580,000 properties, found that Liverpool, Manchester, Middlesbrough, Newcastle upon Tyne and Edinburgh all offered the strongest yields to buy to let investors.

Liverpool postcodes L7 and L6 came in first and second place, boasting average rental yields of 11.79 per cent and 11.59 per cent respectively. The postcodes are close to two of Liverpool’s three universities, fuelling their demand and rendering them buy to let hotspots.

On a similar note, Middlesbrough’s TS1 town centre postcode, which is home to Teeside University, takes thirds place. The postcode offers an average rental yield of 10.94 per cent. The area has an average asking house price of just over £65,000, which places it as one of the most affordable buy to let hotspots.

In fourth place is Edinburgh’s postcode EH8, with average yields of 10.62 per cent. This area is home to the University of Edinburgh, which is the sixth best in the UK, and thus brings an area of great demand for prospective students.

Manchester, which has a staggering student population of 100,000 also performs well. M14 has average rental yields of 10.08 per cent and is home to Manchester Metropolitan University, one of the city’s multiple education facilities.

In contrast, London was one of the worst areas across Britain for buy to let yields, with North London performing particularly poorly. Of all the London postcodes surveyed, five north London postcodes were found in the bottom 10, with rental yields falling as low as 1.5 per cent.

Aside from the capital, the worst performing area was Bournemouth’s BH14. This postcode has an average rental yield of 1.68 per cent. Similarly, Crewe’s CW12 area saw low yields of 1.74 per cent.

Rank

Postcode

Postcode Town

Properties for Rent

Average Monthly Rental Value

Properties for Sale

Average Asking Price

Yield

1

L7

Liverpool

276

£1,162

64

£118,225

11.79%

2

L6

Liverpool

287

£1,046

131

£108,940

11.52%

3

TS1

Middlesbrough

234

£595

102

£65,238

10.94%

4

EH8

Edinburgh

52

£1,962

33

£221,640

10.62%

5

M14

Manchester

787

£1,636

72

£194,733

10.08%

6

NE6

Newcastle upon Tyne

883

£883

237

£111,767

9.48%

7

L1

Liverpool

217

£953

411

£122,152

9.36%

8

PR1

Preston

675

£903

586

£125,341

8.65%

9

M19

Manchester

75

£1,331

67

£185,645

8.60%

10

FY8

Blackpool

80

£1,490

252

£209,556

8.53%

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