As legislation squeezes landlords, here’s where the best buy-to-let yields can still be found

With changes in legislation to tax relief, landlords are being squeezed.

As buy-to-let landlords look for new investment options, TotallyMoney’s twice yearly research and analysis offer some useful insights into the best cities to invest in.

The Free Credit Report and comparison specialists looked at over 580,000 properties across England, Scotland, and Wales to rank each postcode, from best place for buy-to-let yields to worst.

This analysis of over 580,000 properties shows where the highest yields on buy-to-let investments can be made and suggests that university cities can offer the best returns with Liverpool, Manchester, Middlesbrough, Newcastle upon Tyne, and Edinburgh being the top performers.

Buy to Let Yields in 2018

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%

 

Good places to invest in Buy to Let

Liverpool postcodes L7 and L6 take first and second place, with average rental yields of 11.79% and 11.59% respectively. The postcodes are close to two of Liverpool’s three universities, making it a potential hotspot for buy-to-let investors.

Middlesbrough’s TS1 town centre postcode, home to Teeside University, takes thirds place, with an average rental yield of 10.94%. The area also has an average asking house price of just over £65,000, making it one of the most affordable buy-to-let hotspots.

Edinburgh postcode EH8 comes fourth, with average yields of 10.62%. It’s home to the University of Edinburgh, which is the sixth best in the UK, according to the Times Higher Education World University Rankings.

With a student population of 100,000, Manchester also performs well. M14 has average rental yields of 10.08% and is home to Manchester Metropolitan University.

Places with low rental yields

London was one of the worst areas across Britain for buy-to-let yields, with north London faring particularly badly. Of all the London postcodes surveyed, five north London postcodes rank in the bottom 10, with rental yields as low as 1.5%.

Landlords whose hearts are set on a buy-to-let investment in the capital should look to east London for the best returns.

East Ham (E6), Plaistow (E13), Manor Park (E12), Chingford (E4), Stratford (E15), and Poplar (E14) all rank in the top 10 London postcodes for rental profits, yielding 4.81%, 4.52%, 4.3%, 4.11%, 4.1%, and 3.95% respectively.

Outside of London, the worst performing area was Bournemouth’s BH14, which has average rental yields of 1.68%. Crewe’s CW12 comes next, with 1.74%.

All postcodes in the 25 lowest yielding areas have average house prices of more than £300,000, which suggests more affordable house prices generate better rental yields.

Based on the research, TotallyMoney has created an interactive map to help landlords spot the best areas to yield a profit.

TotallyMoney’s Head of Brand & Content, Joe Gardiner, said

“With students flocking to university cities year after year and looking for a place to live, it’s no surprise the student market is a dependable one for landlords.

“Since so many students are looking for accommodation, landlords may use this as an opportunity to drum up competition between them.

“Due to the tenant fee ban, changes in mortgage tax relief, and tighter buy-to-let lending criteria, rental profits are now being squeezed more than ever. To maximise their returns, landlords need to be savvier — and that’s where our map and mortgage comparison tool can help.”

 

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