Estate agent Benham & Reeves has revealed the current best postcodes across the country and in London for buy-to-let yields.
Despite a number of tax and legislative changes making it harder to make strong buy-to-let yields, there are still pockets of the country where landlords can find decent returns on their properties.
The top postcode is currently L7 in Liverpool, according to the research, where a combination of low house prices – at an average of £105,000 – and a large student population result in strong buy-to-let yields, at an average of 10.7%.
The neighbouring L6 postcode is close behind, where buy-to-let yields currently average 10.4%, while Middlesbrough, Manchester, Bradford, Sunderland, Newcastle, Sheffield and Nottingham are also home to some of the best postcodes for rental returns.
Top ten postcodes for buy-to-let yields
|Position||Postcode||Average yield||Average house price|
Marc von Grundherr, the Director of Benham & Reeves, says: “There are a whole host of factors that mean the rental desirability of a property can literally change from one street to the next, but one of the best starting points to work from is the rental yield available.
“Despite the Government’s attempts to dampen the appetite of the sector, it remains a lucrative business and, for those with the time to commit to it, there are plenty of buy-to-let honey pots out there that will bring a great return on your investment.”
Landlords looking to invest in London will find that the E6 postcode in the east, along with IG11, which is located a little further east covering Barking, top the charts in terms of buy-to-let yields in the capital, both offering an average return of 5.0%.
This eastbound stretch of London actually dominates the top ten, with RM8, RM9 and RM10 also among the most lucrative postcodes in the capital, at an average of 4.9%.
N18, which straddles the North Circular, is one of the only postcodes outside of east London to make the list, with buy-to-let yields averaging 4.8%.
RM13 ranks next, with SE28 the only postcode south of the river to appear. E15 and EN3 complete the top ten.
von Grundherr comments: “Of course, London’s more prime postcodes are always a safe bet, attracting investment due to their prestigious image and positioning. While we may have seen some decline in price growth, due to political uncertainty, they remain very much in demand from a rental point of view and so, for those with the budget to buy there, a return isn’t hard to come by.
“They also offer better capital growth than London’s peripherals and, for those not completely dependent on yield, but preferring to opt for more long-term growth, inner London is still the go to place to invest in the capital’s buy-to-let market.”