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Britain’s highest rental yields: the top 10 postcodes for buy-to-let

 

The huge rush to acquire buy-to-let property in the first quarter of the year ahead of the stamp duty change deadline at the start of April, after which a 3% surcharge was added for second homebuyers and buy-to-let investors, illustrated the growth in popularity of buy-to-let property as an attractive investment at a time of low interest rates and volatile stock markets.

The buy-to-let boom of recent years has fed the stereotype that Britons are obsessed with property. Ever since Margaret Thatcher declared her belief in a ‘property-owning democracy’ and introduced Right to Buy in 1980, the UK was converted into a country that saw houses as something to make money from, not just to live in.

Having long provided mega double-digit returns for investors, investment in buy-to-let has outperformed all major asset classes in recent years, with total annual returns from buy-to-let property hitting 12% in 2015 or £21,988 in absolute terms. But where are the best (and worst) rental yields currently achievable? 

The new TotallyMoney Buy-to-Let Yield Map highlights the UK’s buy-to-let hotspots providing both an interesting insight into the market and a useful tool for buy-to-let landlords.

The research, which analysed 137,955 rental properties and 303,822 properties that were marketed for sale online on the 1st of October 2016, reveals a clear geographical divide between the North and the South of the country with northern regions coming out on top and the South East showing particularly poorly.

Nine out of the 10 highest yielding postcode districts are in Scotland and the North/Midlands regions.

The 10 lowest yielding postcodes, with the exception of Edgbaston and Holland Park in Birmingham, are all in Greater London, the South East and the South Coast.

The winning postcodes:

  Postcode  Post Town  Coverage  Average Rent  Average House Price  Yield 
1 LS6 Leeds Beckett Park, Burley, Headingley, Hyde Park, Meanwood, Woodhouse £1,044 £116,115 10.79%
2 BD1 Bradford Bradford City Centre, Little Germany, Goitside, Longlands £552 £64,108 10.33%
3 YO1 York City Centre £1,876 £231,388 9.73%
4 PR1 Preston City Centre, Avenham, Broadgate, Deepdale £952 £125,810 9.08%
5 TS1 Middlesbrough Town Centre £523 £69,368 9.05%
6 L7 Liverpool City Centre, Edge Hill, Fairfield, Kensington £720 £99,114 8.72%
7 M3 Manchester City Centre, Deansgate, Castlefield £1,230 £177,546 8.31%
8 S1 Sheffield Sheffield City Centre £823 £118,861 8.31%
9 HD1 Huddersfield Huddersfield Town Centre, Hillhouse, Lockwood, Marsh £656 £101,536 7.75%
10 CF24 Cardiff Cardiff South, Rumney & Trowbridge £1,220 £192,548 7.60%

... and the losing postcodes:

  Postcode  Post Town  Coverage  Average Rent  Average House Price  Yield 
867 BR2 Bromley Hayes, Shortlands, Bickley, Bromley Common, Keston £1,300 £788,293 1.98%
868 N21 London Winchmore Hill, Bush Hill, Grange Park £1,339 £825,700 1.95%
869 HA6 Northwood Northwood, Northwood Hills, Moor Park £1,732 £1,103,645 1.88%
870 B15 Birmingham Edgbaston, Lee Bank £1,013 £656,412 1.85%
871 W8 London Kensington, Holland Park £4,920 £3,320,116 1.78%
872 RG8 Reading Goring, Streatley, Pangbourne, Whitchurch-on-Thames £1,225 £865,454 1.70%
873 N2 London East Finchley, Fortis Green, Hampstead Garden Suburb £3,764 £2,733,640 1.65%
874 BH14 Poole Lower Parkstone, Lilliput, Penn Hill £1,288 £1,000,795 1.54%
875 N6 London Highgate, Hampstead Heath £2,779 £2,418,305 1.38%
876 BH13 Poole Canford Cliffs, Sandbanks, Branksome Park £1,574 £1,668,641 1.13%
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