The UK’s best and worst buy-to-let postcodes revealed

Manisha Mehta

3-minute read

Last updated:

June 2, 2020

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After Barclays, Accord Mortgages and Skipton International cut rates and raised their lending ceilings, many landlords are looking to expand their portfolios, but where’s the best place in the UK to invest in at the moment?

Mojo Mortgages analysed data from the UK Land Registry, Zoopla, On The Market and property data portal, PropertyData.co.uk to find out where the current hotspots are, and also the areas that don’t generate profitable yields.

In the UK, there are an estimated 2.6m buy-to-let landlords,and despite the pandemic, those who do have the cash to invest believe investment opportunities will emerge, with lenders cutting rates on buy-to-let products and raising affordability thresholds.  

There’s also market sentiment which is leaning towards limiting competition from other buyers and even pushing up demand for rental property.

The top 20 buy-to-let areas in 2020

Postcodes in the top 20 are generating some good returns. The highest being Liverpool, where landlords can enjoy yields of up to 10%. Bradford, Sunderland and Middlesbrough follow with yields of 10%, 9% and 8% respectively. Liverpool and Sunderland are renowned university cities and the consistent flow of potential tenants puts landlords in a good position.

Even postcodes towards the lower end of the top 20 such as those in Aberdeen and Glasgow are returning yields of 7%.

Postcode Town Region Properties for rent Average yield Properties for sale Average price
L7 Liverpool North West 98 10.3% 59 £95,000
BD1 Bradford North West 89 10.0% 63 £57,000
SR1 Sunderland North East 90 9.4% 67 £61,000
TS1 Middlesbrough North East 117 8.8% 93 £56,000
LS4 Burley, Leeds West Yorkshire 124 8.6% 16 £169,000
L6 Liverpool North West 84 8.4% 51 £97,000
L1 Liverpool North West 72 8.1% 191 £104,000
NE6 Newcastle North East 289 7.8% 123 £128,000
CF37 Pontypridd Wales 132 7.7% 133 £125,000
M14 Manchester North West 262 7.6% 12 £177,000
EH8 Edinburgh Scotland 156 7.6% 52 £215,000
G31 Glasgow Scotland 48 7.5% 46 £117,000
L15 Wavertree, Liverpool North West 95 7.4% 78 £138,000
L2 Liverpool North West 40 7.4% 123 £127,000
S1 Sheffield South Yorkshire 97 7.2% 86 £112,000
G32 Glasgow Scotland 50 7.2% 102 £92,000
CH41 Birkenhead North West 38 7.1% 98 £84,000
AB11 Aberdeen Scotland 103 7.1% 67 £93,000
G4 Glasgow Scotland 88 7.0% 46 £172,000
AB24 Aberdeen Scotland 270 7.0% 83 £99,000

Liverpool

  • Liverpool’s L7 postcode tops the buy-to-let yield table, generating yields of 10.30% and an average asking price of £95,000
  • The L7 postcode covers the area of Edge Hill and is in close proximity to Liverpool City Centre
  • Five more Liverpool postcodes feature in the top 20, with yield returns ranging from 7.40% to 10.30%

Bradford

  • ‍In second place is Bradford with the BD1 postcode returning a rental yield of 10%, and the average asking price£57,000
  • The BD1 postcode covers the main town centre of Bradford, offering commuters easy access to bigger cities such as Leeds

Sunderland

  • ‍Over to the North East, and Sunderland is generating 9.40% in rental yields
  • Having a solid student population is helping to prop this percentage up
  • The average asking price of a property in Sunderland is £61,000

The North West

From our analysis, the North West has is one of the top regions for strong buy-to-let yields. As well as a number of profitable areas in Liverpool, the area of M14 in Manchester which covers Fallowfield has a yield of 7.60%. Both these cities have a solid student population, plus property prices are relatively low.

The 10 worst buy-to-let postcodes in 2020

Postcode Town Region Properties for rent Average yield Properties for sale Average price
RH20 Horsham South East 29 2.1% 158 £547,781
SW3 Kensington and Chelsea London 245 2.1% 112 £1,612,797
WC2 Westminster, Islington, Camden London 129 2.0% 101 £1,671,087
B95 Stratford-upon-Avon West Midlands 36td 2.0% 114% £575,190
RG10 Wokingham South East 42 2.0% 113 £611,725
HR9 Hereford West Midlands 21 2.0% 134 £353,758
W8 Kensington and Chelsea London 172 2.0% 108 £1,891,603
HP9 Chiltern South East 46 1.8% 109 £1,071,041
SW7 Kensington and Chelsea London 231 1.7% 125 £2,097,726
W1 City of London London 157 1.4% 68 £2,388,107

Properties in the City of London and its surrounding boroughs generate the lowest yields in the UK, whilst average prices to buy are above the £1m mark.

The South East also features in the list, more than likely due to areas such as Wokingham, Chiltern and Horsham being commuter hotspots , rather than areas to rent in.

Stratford-upon-Avon is the only location in the West Midlands to feature in the bottom 10, with an average yield of 2% and  average asking prices at just over half a million pounds.

Top 10 London buy-to-let areas in 2020

Postcode Area Properties for rent Average yield Properties for sale Average price Average asking rent (pm)
IG11 Barking 74 5.4% 135 £289,374 £1,302
RM9 Dagenham, Becontree 39 5.3% 77 £314,129 £1,380
RM8 Dagenham, Becontree Heath 29 5.2% 46 £317,533 £1,388
RM10 Dagenham 24 5.0% 53 £317,609 £1,336
UB5 Northolt 29 5.0% 79 £318,272 £1,318
E12 Manor Park, Little Ilford, Aldersbrook 19 4.8% 39 £380,554 £1,509
E6 East Ham, Beckton, Upton Park, Barking 35 4.7% 85 £384,498 £1,497
E13 Plaistow, West Ham, Upton Park 39 4.7% 77 £378,612 £1,486
RM13 Rainham, South Hornchurch, Wennington 17 4.6% 82 £366,944 £1,412
RM6 Chadwell Heath, Little Heath 33 4.6% 54 £346,458 £1,355

London has a huge demand for rental properties and being in the big smoke allows for a more diverse range of abodes to choose from.

IG11 in the London Borough of Barking offers the best rental yield and average asking prices of £289,374.

Dagenham features three times in top 10, with areas such as Becontree and Becontree Heath also generating yields of more than 5%.

The London Borough of Ealing only featured once in the top 10 with Northolt generating an average yield of 5%.

The 10 worst London buy-to-let areas in 2020

Postcode Area Properties for rent Average yield Properties for sale Average price Average asking rent (pm)
SW14 Mortlake, East Sheen 28 2.5% 70 £994,028 £2,030
EC2 East Central London 177 2.4% 140 £1,325,933 £2,705
SW5 Earl's Court 240 2.4% 142 £1,076,946 £2,187
N6 Highgate, Hampstead Heath 79 2.2% 98 £865,998 £1,614
SW1 Central London 269 2.1% 195 £1,529,559 £2,666
SW3 Chelsea, Brompton, Knightsbridge 145 2.1% 112 £1,612,797 £2,868
WC2 Central London 129 2.0% 101 £1,671,087 £2,811
W8 Kensington, Holland Park 172 2.0% 108 £1,891,603 £3,119
SW7 South Kensington, Knightsbridge 231 1.7% 125 £2,097,726 £2,981
W1 Central London 157 1.4% 68 £2,388,107 £2,807

High property prices in London means that a buy-to-let property in the area must work hard to return a profit, however, in some areas of the city, that can prove to be difficult.

The postcode of W1 in Central London generates the worst yield at 1.4%, with the average asking price of a property around £2.3m, whilst average asking rent is at £2,807 per month.

The average salary in London equates to £37k annually, and £2,300 monthly, making it unaffordable for many sole renters to go it alone.

The 'best' of the ‘worst’ is in Hampstead Heath, N6 where the average asking price is lower than in other areas of the worst 10, at £865,000,and average asking rent is £1,614, making the buy-to-let yield 2.2%.

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