Landlords looking for the UK’s best buy-to-let areas in 2020 should consider Liverpool and the North East of England, as well as Scotland.
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TotallyMoney’s latest list of the best buy-to-let areas is out. They’ve looked at nearly 500,000 properties across England, Scotland and Wales, analysing the yield generated in each area.
Here you can find out the best (and worst) postcodes for buy-to-let. For a snapshot of the results:
Sixteen of the top 25 postcodes are in the North West (predominantly Liverpool) and Scotland.
The North East also features prominently in the best areas for buy-to-let. TS1 and TS3 in Cleveland ranked fifth and twelfth respectively, while Sunderland features twice with SR8 and SR5, and Gateshead’s NE8 is ranked eighteenth.
The majority of the strongest postcodes in Britain have a yield of around 7 per cent. These include Leeds’ LS2 at 7.92 per cent, Cardiff’s CF43 at 7.61 per cent, Aberdeen’s AB11 at 7.2 per cent, and Lancaster’s LA14 at 7.06 per cent.
According to the research, here are the 10 best buy-to-let areas 2020:
The remaining postcodes in the top 25 best areas for buy-to-let are:
When looking at the best areas for buy-to-let, TotallyMoney has also listed the poorer performers. These are the areas with the lowest rental yields in the UK.
The research found that many well-known commuter areas have the lowest yields.
The lowest is AL5 in St Albans, where the average buying price is £800,000 and the average rent is £1,300, producing a yield of only 1.95 per cent.
This puts it below London’s W8 postcode (Kensington), which produces a return of 2.05 per cent. This is because average house prices are higher at almost £2 million.
Other commuter spots in the bottom 10 areas for buy-to-let include RG10 in Reading, GU10 in Guildford, and KT7 in Kingston-upon-Thames.
Sheffield has a postcode in both the top 10 (S1) and bottom 10 (S7). And TotallyMoney calls out Ipswich too, as properties there have a median asking price of £397,500 and a rental value of £650.
The research used data from a total of 478,486 properties available to rent and for sale. It defined yield in basic terms, as the average annual rent divided by the average asking price.
In the case of Liverpool’s L1 postcode, for example, the research found that landlords typically buy a property for £90,000 and rent it out for £750 a month on average. Multiply 12 months to get the annual rent and divide this by the £90,000 asking price to get a yield of 10 per cent.
The calculation does not take into account the cost of a mortgage. And to be included in the research, postcodes needed to have more than 30 properties for sale and 30 properties for rent.
James McCaffrey, of credit experts TotallyMoney said: “There are pockets of profit for landlords. It seems that Scotland and the North are good places to start a buy-to-let property search.”
However, he added a word of caution, saying: “Landlords should always do their research before committing to a property purchase, Understanding current market trends is part of that. Making sure they’re financially prepared is another.”
Looking for a full overview of the best buy-to-rent areas in the UK? Take a look at TotallyMoney’s research here.
From Liverpool, rated as the best area for buy-to-let, to St Albans (the worst area for buy-to-let) – here’s where to buy property for rental.
Where will you next purchase a buy-to-let property? Let us know in the comments below.
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