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Revealed: the UK’s top buy-to-let hotspots

Find out which are the highest-yielding areas for buy-to-let investors

Revealed: the UK’s top buy-to-let hotspots

The verdant greens of Sherwood Forest, the wild roars from Trent Bridge stadium and the buzz of more than 60,000 students: these can all be found in the county of Nottingham, which has been revealed as the most lucrative place to have a buy-to-let property. 

Bustling areas which are home to big universities, such as Liverpool, Manchester, and Leeds dominate the top 25 areas for the highest buy-to-let yields according to new research carried out by financial comparison site Totally Money.

So, where should landlords be looking for an investment bargain in 2019? Find out where the biggest buy-to-let yields are on offer, and the areas to avoid if you’re looking to make a decent profit from a buy-to-let property.

Nottingham: a buy-to-let yield of almost 12%

Totally Money identified the postcode area of NG1, which is in a prime position to house students at Nottingham Trent University, as the area in the country with the biggest potential buy-to-let yields.

With average monthly rental yields of £1,525 and an average property price of just £152,000, prospective investors could bag a yield of 11.99% in this postcode area.

NG7, which includes the University of Nottingham, also sits in the top five, with a potential yield of 8.89%. The average rent is £1,187 a month, against an average property price of around £160,000.

Across the whole of Nottingham, the average asking price for a property is £267,900, and the average monthly rental income is around £750.

Mapped: buy-to-let hotspots across the UK

Use this interactive map to discover where the buy-to-let hotspots are across the UK.

Research produced by TotallyMoney.

Top 10 highest-yielding postcodes

Two spots in the top 10 are in Liverpool, enjoying higher-than-average monthly rental yields and low property prices.

The report from Totally Money says: ‘Of those, L7 ranks highest, delivering an average rental yield of 9.79%. The postcode covers the city centre, Edge Hill, Fairfield and Kensington, close to two of Liverpool’s three universities.

‘L1 yields 9.33% and L6 yields 7.85%. The L2 postcode — known for the trendy Cavern Quarter — only just makes it into the top 25 buy-to-let hotspots [with a yield of] 6.80%.’

Meanwhile, the NE1 postcode, ranked seventh in the table, is not far from both Newcastle University and Northumbria University, suggesting that proximity to higher education sites are driving up rental yields.

Postcode Area No. of properties for rent Average monthly
rental value
No. of properties
for sale
NG1 Nottingham 44 £1,525 169 £152,631 11.99%
L7 Liverpool 149 £941 79 £115,398 9.79%
TS1 Cleveland 185 £543 96 £68,925 9.45%
L1 Liverpool 116 £923 404 £118,754 9.33%
NG7 Nottingham 240 £1,187 168 £160,269 8.89%
NE6 North East 540 £834 216 £118,789 8.43%
NE1 North East 357 £1,095 157 £161,035 8.16%
S2 Sheffield 238 £853 117 £125,483 8.16%
SS1 Southend-on-Sea 100 £2,736 207 £409,233 8.02%
BD1 Bradford 153 £439 130 £65,889 8.00%

Buy-to-let in London: good or bad idea?

The capital remains a challenging place to get a decent yield from your investment, with property affordability presenting the biggest drag on yields.

While areas in East Ham and Thamesmead offer properties with lower asking prices and, therefore, more attractive yields, the huge level of investment required in London doesn’t provide much bang for your buck.

East Ham, London’s highest-yielding postcode area, is way down at position 296 in Totally Money’s nationwide yield rankings.

At the other end of the scale, the lowest-yielding London area is Highgate (N6), which has an average monthly rent of £2,469 but an eye-watering average property price of £1.53m.

Postcode Area No. of properties for rent Average monthly rental value No. of properties
for sale
E6 East Ham 151 £1,421 211 £354,162 4.81%
W6 Hammersmith 1189 £3,727 378 £999,465 4.47%
SE28 Thamesmead 69 £1,102 120 £296,439 4.46%
E15 Stratford 277 £1,690 491 £455,249 4.45%
SW1 Westminster 1440 £9,311 1119 £2,572,352 4.34%
E13 Plaistow 96 £1,418 237 £397,865 4.28%
E14 Poplar 1686 £2,252 2074 £631,946 4.28%
SW17 Tooting 318 £2,051 499 £578,098 4.26%
E4 Chingford 87 £1,613 340 £457,088 4.23%
NW3 Hampstead 1035 £5,761 717 £1,647,625 4.20%

Areas with the lowest buy-to-let yields

Keen to avoid the buy-to-let ‘not-spots’? Bournemouth has the lowest rental yield in the country, as a result of relatively low rental values combined with huge house prices.

Properties in Watford, popular with commuters, have an average asking price of just under £700,000, and postcode areas in Bolton, Doncaster and Wakefield will all struggle to generate decent returns because of low monthly rental values.

Postcode Area No. of properties
for rent
Average monthly
rental value
No. of properties
for sale
BH14 Bournemouth 65 £1,389 353 £704,370 2.37%
WD3 Watford 58 £1,363 204 £699,428 2.34%
BH13 Bournemouth 84 £2,408 211 £1,243,590 2.32%
DN22 Doncaster 34 £482 258 £252,432 2.29%
GL54 Gloucester 31 £1,188 150 £625,333 2.28%
WF2 Wakefield 41 £535 252 £282,454 2.27%
BL7 Bolton 31 £701 135 £370,315 2.27%
SW8 London 424 £2,845 1074 £1,504,580 2.27%
HP16 Hemel Hempstead 31 £1,459 113 £772,860 2.27%
SA3 Swansea 51 £837 395 £443,971 2.26%

Buy-to-let mortgages: what do I need to know?

If you’re looking to borrow money to fund an investment property, buy-to-let mortgages are usually arranged on an interest-only basis. While this means you will have lower monthly repayments, as you’re only paying off interest, you will need to have a plan to pay off the actual loan at the end of your term.

There are stricter affordability rules for buy-to-let mortgages. You typically need a deposit of at least 25% and the projected rent will need to cover 125% of your mortgage repayments.

Landlords have to pay tax on their rental income, although they currently enjoy tax relief of on mortgage interest. Find out more in our guide to buy-to-let mortgage interest tax relief.

They also face a buy-to-let stamp duty surcharge, paying an additional 3% on the standard stamp duty rates. Use the calculator below to work out how much your stamp duty bill might be.


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