For investors looking to buy properties to let out, deciding where to purchase can be a difficult decision.
Totally Money recently produced a report investigating the best places in the country to invest in buy to let.
To check out the map click here, but we’re going to give you a quick summary of the findings.
The North undoubtedly comes out on top in the battle of the postcodes. In fact, the only two entries in the top 20 best yields in the UK that sit south of Sheffield are Guildford’s GU14 postcode at number 11, with a yield of 8.49% and Bristol’s BS2 at number 16, with a yield of 7.87%.
Whilst the average yield is 4.17% nationwide, Liverpool’s L7 postcode weighs in at number 1 in the country with a yield of 11.79%. The L7 postcode is situated very close to John Moores University and Liverpool’s L6 postcode, which comes in a close second place with a yield of 11.52% yield is conveniently located near the University of Liverpool.
Liverpool postcodes appears 4 times in the top 20 and the city also has a low average annual interest-only mortgage cost at £2,440, making it one of the top places to invest in buy-to-lets in the current market.
Edinburgh also does well in the rankings, appearing 5 times in the top 20. The EH8 postcode (number 4 on the list) only has 52 properties up to let, as opposed to Liverpool having 276 up to let in L7 and 287 in L6, Middlesbrough’s TS1 postcode having 234 and Manchester’s M14 with 787 (numbers 1,2,3 and 5 on the list). What this means for landlords is that if you can buy a property in Edinburgh, the large competition for rental properties could mean an even bigger yield than expected.
Both Bradford and Middlesbrough have average house prices below £70,000 so buy there if you are looking for a good yield for a super low price. However, these cities aren’t known as major universities cities so landlords won’t get the assurance of the thousands of university students guaranteed in cities like Newcastle and Liverpool.
It might not be a surprise that London yields are low. Although it’s pricey to rent in London, it’s even more pricey to buy. Properties in most London postcodes come in at an average of well over £1million to purchase. The highest buy-to-let yield from the London area is in East Ham and doesn’t even reach 5%. London wallows in the low-placed postcodes yet again.
But, if you’re looking for properties within a good commutable distance from London, look to Norwich NR5 with a yield of 7% or Guildford GU14 with a yield of 8% which again, are both popular student areas.
The clear winners here are the Northern university cities. To invest in buy-to-let properties from the Northern postcodes with high volumes of students moving to the area you’re almost certainly guaranteed a good yield. Although some landlords can shy away from renting to students, evidence suggests that where students go, profits follow. The consistently high demand for rental properties for students means landlords have competition for their properties and a continual stream of potential tenants.
The battle of the postcodes is settled for now.
If you’re interested in investing in a rental property as a long term investment visit our recent article here.