Looking to invest in the lucrative buy-to-let property market? Perhaps you already have. Maybe it’s time to expand. Regardless, the question remains the same:
Where to?
The UK is home to numerous postcodes that are prime real estate for investors. Some offer excellent returns. Others have lower yields but never perform as poorly as the country’s worst buy-to-let areas. It’s crucial that you know about them. Set your sights in the right direction with the following rankings.
Summary
In their 2020 study, local fintech TotallyMoney assessed over 500,000 properties across England, Scotland, and Wales. Here’s a quick summary of the results:
- Liverpool L1 leads with an impressive yield of 10%
- Falkirk FK3 and Glasgow G52 follow with returns of 9.51% and 8.71% respectively
- St Albans AL5 sits furthest from the front due to its measly 1.95% yield
A considerable portion of the top 25 postcodes are in the North West. You can find 16 in Liverpool and Scotland alone. The North East features prominently as well, with TS1 and TS3 in Cleveland ranking among the top 15 postcodes.
The Best Areas
Returns in the 7% range characterise the majority of profitable places. For instance, LS2 in Leeds is at 7.92% while CF43 in Cardiff generates 7.61% and Aberdeen is rated 7.2% in the AB11 postcode. Listed below are the rest of the best:
- Liverpool L11 (8.67%)
- Kilmarnock KA1 (8.31%)
- Liverpool L6 (8.12%)
- Leicester LE1 (8%)
- Sheffield S1 (7.83%)
- Liverpool L2 (7.56%)
- Paisley PA3 (7.45%)
- Liverpool L3 (7.40%)
- Sunderland SR8 (7.38%)
- Glasgow G51 (7.32%)
Now that you’re familiar with the most suitable buy-to-let locations in the UK, you can narrow down your search.
Remember to consider financing. Large mortgage loans are often required for property in these areas. You can learn more about large mortgages here on the website for Enness Global, which works with over 500 lenders worldwide to achieve competitive interest rates. They also accommodate international clients, making them ideal for overseas investments.
The Worst Areas
It’s also important to identify which parts of the UK are unsuitable for buy-to-let businesses. Fortunately, the poorest performers were also included in the aforementioned study. As you’ll quickly notice, the lowest yields tend to come from commuter postcodes such as Ipswich IP13, with its 1.96% return rate. Not too far ahead are the following areas:
- London WC1X (2.28%)
- Reading RG10 (2.26%)
- Guilford GU10 (2.22%)
- Kingston Thames KT7 (2.20%)
- Sheffield S7 (2.19%)
- Birmingham B73 (2.18%)
- London W8 (2.05%)
- Gloucester GL6 (2.03%)
As we touched on earlier, St Albans AL5 is the lowest. The median buying price in the postcode is £800,000 and rent is around £1,300 on average, translating to the shoddy 1.95% yield. Housing prices in London, which are anything but average, are the main reason why the capital city ranks comparatively low.
Be sure to thoroughly research your options. Your diligence is guaranteed to pay off in the long run.
