As the new tax changes on buy-to-let properties make the profit margins for private landlords even smaller, a new study from TotallyMoney.com has revealed which UK postcodes are the best for buy-to-let mortgages.
By calculating buy-to-let yields across Great Britain, TotallyMoney.com found that residential property investors should look to Liverpool’s L7 postcode. Covering the city centre, Edge Hill and Fairfield, the postcode was calculated to return a buy-to-let yield of 16.23%.
Liverpool was also found to be the UK’s best city for buy-to-let mortgages, with five of the top ten yielding postcodes lying within the city.
Some other interesting point found in the study:
- The HD1 postcode in Huddersfield, LS2 in Leeds and S2 in Sheffield also featured in the top ten buy-to-let areas of the country.
- Poole’s BH14 postcode is the worst area in Great Britain to get a buy-to-let mortgage in, with an average yield of 1.4%, even though the average house price in this postcode is £954,032.
- If you want to invest in London property then you should be looking in the E13 postcode around West Ham and Upton Park. This area was found to have the highest average buy-to-let yield in the capital. The nearby E12 and E15 postcodes also ranked in the top ten of London’s buy-to-let hotspots.
- London’s W8 postcode, which covers some of the country’s most expensive properties in areas such as Kensington and Holland Park, was actually found to have a very poor yield for buy-to-let mortgages at only 2.03% on average.
- At 16.23%, the average yield of Great Britain’s best buy-to-let postcode (Liverpool’s L7) is more than ten times higher than the yield in the country’s worst postcode, Poole’s BH14, which has an average yield of only 1.40%.
- The EH8 postcode which covers the Southside, Newington and Canongate areas in Edinburgh was found to be the best place in Scotland for buy-to-let mortgages with an average yield of 8.02%. This postcode was the 21st best buy-to-let hotspot in the UK rankings.
- Edinburgh’s EH postcode area had the most occurrences in Scotland’s top ten buy-to-let mortgage areas, followed by Glasgow’s G postcode area.
- Out of Wales’ top ten buy-to-let hotspots, seven of them are in Cardiff’s CF postcode area.
- The SA3 postcode in Swansea, which was found to have the 23rd lowest average buy-to-let yield in the UK, was the only non-English postcode in the UK’s bottom 25.
TotallyMoney.com has also created an interactive map that clearly shows the stark difference between average buy-to-let yields in different postcodes across the country.
Joe Gardiner, Head of Brand and Communications at TotallyMoney.com, said of the research: ‘Many people finance properties using a buy-to-let mortgage with the intention of boosting their income a little.
‘The recent tax changes will move several landlords to a higher tax rate, making it harder to make money from investing in property in this way.
‘While this may put off many potential landlords from getting a buy-to-let mortgage, the buy-to-let hotspots map can show them where their investment will bring the best yield.’