Revealed: best rental yield areas for buy-to-let

Landlords currently looking for the UK’s best buy-to-let areas should head north to places like Liverpool and Scotland, with new research revealing that they offer some of the highest buy-to-let yields, making them potentially the most lucrative hotspots for property investors at the moment. 

Properties in Liverpool appear to offer particularly good returns, with the L1 postcode offering an average rental yield of 10%, according to the study by credit experts TotallyMoney. 

Buy-to-let investors could easily acquire a property for an average of £90,000 and expect to support their investment with an asking rent of about £750 per calendar month.

Two Scotland postcodes make the top three, and they are Falkirk’s FK3 and Glasgow’s G52, returning 9.51% and 8.71% yields respectively. 

A total of nine Scottish areas feature in the top 25 of the best yields. 

In fact, 16 of the top 25 postcodes are in the North West, predominantly Liverpool and Scotland.

The North East also has some top performers. TS1 and TS3 in Cleveland rank fifth and 12th  respectively, while Sunderland features twice, in the SR8 and SR5 postcodes, while Gateshead’s NE8 has a 7.27% yield - putting it in 18th position.

The majority of the strongest UK postcodes return a yield of 7%. These include Leeds’ LS2 (7.92%), Cardiff’s CF43 (7.61%), Aberdeen’s AB11 (7.20%) and Lancaster’s LA14 (7.06%). 

All postcodes in the top 25 have property asking prices under the current UK national average of £232,710. 

At the other end of the spectrum, a number of commuter belt areas have the lowest yields. 

At the very bottom is AL5 in St Albans. The average buying price for a property is £800,000, and asking rent is £1,300 per calendar month, which means a total yield of just 1.95%.

This puts it below Kensington’s W8 postcode in London, which still manages to squeeze out a 2.05% return for landlords even though average property prices are a hefty £1,962,500.

Other commuter spots in the bottom 10 include RG10 in Reading (2.26%), GU10 in Guilford (2.22%) and KT7 in Kingston upon Thames (2.20%).

Spokesperson for TotallyMoney, James McCaffrey, said: “Many existing and would-be landlords wonder if buy-to-let is still worth it. Our findings are another source to help property investors answer that question.

“The maps and data clearly show there are pockets of profit for landlord investment this year. And it seems that Scotland and the North are good places to start a buy-to-let property search.

“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.

“To negotiate the best mortgage rates, investors need a clear knowledge of where they stand in the credit market.” 

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