The UK's buy-to-let hotspots revealed: student living tops the tables

3 December 2018
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Despite landlords being hit with a raft of regulations in the past few years there are still plenty of opportunities for investment in the buy-to-let sector, new research suggests.

According to credit report company TotallyMoney, university cities offer some of the highest buy-to-let yields, making them potentially the most lucrative hotspots for landlords.

TotallyMoney surveyed over 580,000 properties across Britain to rank postcodes in order of highest buy-to-let yields to the lowest.

It found that Nottingham, which has a student population of over 37,000, is one of the best places in the UK to invest with two postcodes featuring in the top five.

Produced by TotallyMoney.

The NG1 post code takes first place with an average rental yield of 11.99%, while NG7 takes fifth place with an average yield of 8.89%.

Property prices are also affordable, averaging £152,631 and £160,269 respectively — far below the UK average of £226,906. It has a student population of over 37,000.

In second place was Liverpool, with two postcodes in the top five, and five postcodes in the top 20. It has 70,000 students as well as three universities.

Postcode L7 takes second place and has average rental yields of 9.79%. L1 also performs well, taking fifth place, with average yields of 9.33%.

Newcastle’s NE6 takes sixth place, with an average rental yield of 8.43%. Property prices here are far below the UK average at £118,789, with Newcastle and Northumbria universities approximately 30 minutes away on public transport.

Similarly, Newcastle’s NE1 postcode has yields of 8.16%, and is within walking distance to both universities. Property prices are slightly higher at £161,035, but are still below the UK average.

TotallyMoney’s Mark Moloney says: “With students flocking to university cities year after year and looking for a place to live, it’s no surprise the student market is a dependable one for landlords.

“Since so many students are looking for accommodation, landlords may use this as an opportunity to drum up competition between them."

He adds: “But, due to the tenant fee ban, changes in mortgage tax relief, and tighter buy-to-let lending criteria, rental profits are now being squeezed more than ever. To maximise their returns, landlords need to be savvier - and that’s where our map and mortgage comparison tool can help.”

The best buy-to-let areas in Britain

Rank

Postcode

Postcode Town

Properties for Rent

Average Monthly Rental Value

Properties for Sale

Average Asking Price

Yield

1

NG1

Nottingham

44

£1,525

169

£152,631

11.99%

2

L7

Liverpool

149

£941

79

£115,398

9.79%

3

TS1

Cleveland

185

£543

96

£68,925

9.45%

4

L1

Liverpool

116

923

404

£118,754

9.33%

5

NG7

Nottingham

240

£1,187

168

£160,269

8.89%

6

NE6

North East

540

£834

216

£118,789

8.43%

7

NE1

North East

357

£1,095

157

£161,035

8.16%

8

S2

Sheffield

238

£853

117

£125,483

8.16%

9

SS1

Southend-on-Sea

100

£2,736

207

£409,233

8.02%

10

BD1

Bradford

153

£439

130

£65,889

8.00%

Source: Totally Money

London

Some of worst performing rental yield postcodes are in London and Greater London.

With property prices in London far above the UK average, buy-to-let landlords in the capital have to make their property work harder to turn a profit.

Five of the areas with the smallest yields are in North London, with the N6 postcode performing the worst.

While average property prices are above £1.5 million in this area, the rental yield is only a meagre 1.93%.

Property in the N21 postcode performs marginally better, delivering an average yield of 2.22%. This covers the Winchmore Hill and Grange Park areas.

East Ham is the hottest spot with a 4.81% average yield with E6, E15, E13, E14 and E4 all ranking in the top 10.

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