Looking for the key to successful property investment? Use our 2019/2020 buy-to-let guide yield to find prime pockets of profit and discover which areas aren’t worth the money.
Continued changes in tax relief and greater landlord responsibilities are two factors that may have you wondering if residential investment properties are worth it. To help you come to a conclusion, we’ve analysed the data of nearly 500,000 properties across England, Scotland and Wales. Our mission: to calculate the buy-to-let yield for each postcode. The result: a guide full of maps and quick insights to assist your decision in investment property.
Top 25 buy-to-let areas
Postcodes in the top 25 are delivering handsome returns. The highest is Liverpool, where landlords can enjoy 10% yields. Coming a close second and third are Falkirk (9.51%) and Glasgow (8.71%). With two of these being renowned university cities, the consistent flow of potential tenants puts landlords in a healthy position.
Even the postcodes at the lower end of the top 25, such as Sunderland and Lancaster, are returning yields of around 7%.
- Liverpool’s L1 city centre postcode tops the buy-to-let yield table with a potential 10% return on investment and a current asking price of around £90,000. This area includes the central retail area (including Liverpool One), the commercial district, and Chinatown.
- Five more Liverpool postcodes make the top 25 with yield returns ranging from 7.13%-8.67%.
- The L11 postcode ranks fourth in the top 25 and covers Croxteth and Norris Green. It’s also a short distance from Aintree University Hospital and approximately five miles to the city centre.
- In second place, Falkirk returns a rental yield of 9.51% in postcode FK3. Covering the Grangemouth area, it’s close to The Kelpies and the Falkirk wheel — the world’s only rotating boat lift.
- The current asking price for property in FK3 is around £62,450 and monthly rent is approximately £495.
- A total of five Glasgow postcodes made it into the top 25, with the best performing being G52. This postcode covers areas such as Hillington, Cardonald, Penilee and Mosspark. Buy here and landlords can expect a yield return of 8.71%.
- Glasgow postcode G21 scraped into the top 25. City districts include Springburn and Balornock. Current property asking prices are around £93,000 and monthly rent is £550.
- Other good postcodes include G32 (7.13%), G67 (7.2%) and G51 (7.32%). The latter includes Queen Elizabeth University Hospital, the Ibrox Stadium and the Glasgow Science Centre in the local area.
The North East
- Within England, look to the North East for strong buy-to-let yields. A cluster of popular student cities is on your doorstep, including Sunderland, Newcastle and Middlesbrough.
- Within this region, the best returns can be found in Cleveland’s TS1 postcode. The current asking price is around £60,000 and rental prices are £425, giving landlords a healthy 8.5% yield.
- Properties in TS3, SR8, NE8, and SR5 also perform well, with rental yields ranging from highs of 7.6% in Teeside, and only a slight decrease to 6.9% in Sunderland.
The UK’s worst buy-to-let postcodes
Here are the worst-performing postcodes for buy-to-let investments.
- St Albans is a commuter haven for those working in London, which could explain why it has the worst buy-to-let yield at just 1.95%.
- Other well-known commuter areas in the bottom 10 include Reading’s RG10 (2.26%), Guilford’s GU10 (2.22%) and Kingston upon Thames’ KT7 (2.20%).
- The Ipswich IP13 postcode is also best avoided as a paltry 1.96% yield is likely, partly thanks to properties costing as much as £397,500 and rent prices of £650.
- As of July 2019, the UK House Price Index lists the average cost of residential property in the UK at £232,710. All 10 postcodes in the worst-performing buy-to-let areas are much more than this.
Having looked at the best and worst buy-to-let areas, we now take a closer look at Scotland, Wales and London.
Top 20 London buy-to-let areas
Buy-to-let landlords in London benefit from high rental demand. Big Smoke landlords can enjoy a reliable, constant stream of suitable tenants for a range of property types
- E12 offers the best buy-to-let yields in London, offering landlords an average of 6.04% return. A little further out from Stratford, the area covers Manor Park and Aldersbrook.
- Seven of the top 20 buy-to-let postcodes in London can be found in Romford. The highest yield is in the RM9 postcode (5.46%) and the lowest is in RM17 (4.58%).
- The only north London postcode to make it into the London top 20 is N18 (4.92%), where you’ll find North Middlesex University Hospital.
10 of the worst buy-to-let areas in London
High asking prices mean a buy-to-let investment property in London must work hard to return a profit. In some areas of London, this is nearly impossible.
- The yield in W8 (Kensington) is the worst in London. Expect to pay around £1,962,500 for a property and a monthly rent of £3,356. Total yield: 2.05%.
- The best of the worst is N21, which covers Grange Park and Winchmore Hill. Its ‘lower’ property price of £699,995 pushes the buy-to-let yield up to 2.56%.
Top 10 buy-to-let postcodes in Scotland
Two of the top three best buy-to-let postcodes in the whole of the UK are in Scotland — FK3 (9.51%) and G52 (8.71%). But where else puts in a strong performance?
- KA1 in Kilmarnock delivers a very attractive 8.31% yield, while third place is PA3 in Paisley with a 7.45% return. Average property prices in both areas are comfortably under £70,000.
- Glasgow has the most postcodes in Scotland’s top 10. As mentioned, Glasgow’s G52 postcode sits at the top, but the city’s G51 (7.32%), G67 (7.20%), G32 (7.13%) and G13 (6.76%) are also valuable.
Worst buy-to-let areas in 10 Scotland
The worst performing postcodes seem to be scattered across Scotland, with low yield rates hovering at similar levels wherever the postcode.
- All of the bottom 10 Scotland postcodes have a buy-to-let yield between 3% and 3.7%. The best of the worst is AB15 (Aberdeen) at 3.72% and the worst is TD15 (Galashiels) at 3.08%.
- The worst-performing postcodes in Glasgow are G77 (3.66%), G84 (3.63%) and G71 (also 3.63%).
Ten best buy-to-let postcodes in Wales
Unsurprisingly, Cardiff, Newport and Swansea dominate the top 10 for Wales.
- Postcode CF43 offers landlords the highest yield in Wales with 7.61%. This area includes Maerdy, Ferndale, Tylorstown and Stanleytown.
- The highest returns in Newport can be found in NP13 at 5.78%. Current property asking prices are £82,000 and asking rent is £395.
- Swansea’s SA1 postcode ranks fourth in the top 10, delivering a 5.78% yield.
Worst 10 postcodes in Wales
Almost like a reflected mirror of the top 10, here are the lowest postcodes in Wales.
- Newport postcodes are variable. NP7 comes last with a 2.29% yield, while NP10 offers a slightly better 3.52% profit margin.
- Llandudno LL30 takes second place in the bottom 10. Properties in the Northern Wales coastal town are £193,000, while the current asking rent is £565. Total yield: 3.51%.