New research shows university cities offer landlords some of the highest buy-to-let yields

New research by credit experts TotallyMoney reveals university cities offer some of the highest buy-to-let yields, making them potentially the most lucrative hotspots for landlords.

The Free Credit Report company surveyed over 580,000 properties across England, Scotland, and Wales to rank postcodes in order of highest buy-to-let yields, to lowest.

The research showed locations with a high student population — like Nottingham, Liverpool, Manchester, Leeds, and the North East — boast some of the UK’s highest rental yields.

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%
11 L6 Liverpool 181 £765 123 £116,995 7.85%
12 TS3 Cleveland 38 £431 75 £67,489 7.66%
13 L5 Liverpool 48 £668 122 £104,893 7.64%
14 SR1 Sunderland 117 £567 47 £90,347 7.53%
15 HD1 Huddersfield 171 £838 61 £134,246 7.49%
16 L3 Liverpool 208 £836 817 £134,803 7.44%
17 LS6 Leeds 799 £1,483 79 £239,505 7.43%
18 M14 Manchester 433 £1,265 95 £214,848 7.07%
19 DN31 Doncaster 39 £398 51 £68,301 6.99%
20 PR1 Preston 653 £845 606 £147,076 6.89%

Soaring to the top…

Nottingham is the city that soars to the top, with two postcodes featuring in the top five. NG1 takes first place with an average rental yield of 11.99%, and 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.

Following closely behind…

Liverpool takes second place, with two postcodes in the top five, and five postcodes in the top 20. It has an approximate student population of 70,000, as well as three universities, which is thought to contribute highly to its strong yields.

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

Low capital in the capital

Like all things property-related, London struggled to perform well compared with its UK counterparts.

North London in particular was a poor performer, with five postcodes in the bottom 10. Highgate in N6 was the worst postcode in the capital and third from bottom overall, with paltry yields of just 1.93%.

Landlords whose hearts are set on the capital need to head east for the best return on investment.

E6 in East Ham offers the best London yields at 4.81%, with Stratford (E15), Plaistow (E13), Poplar (E14), and Chingford (E4) all ranking in the London top 10.

It’s thought that higher-than-average house prices and tighter mortgage-lending criteria have contributed highly to the poor rental yields in London.

Some buy-to-let mortgage providers now require rental payments to cover mortgage repayments by a surplus of 45%, making it harder for landlords to turn a profit.

More bang for your buck

Based on the research, TotallyMoney has created an interactive map, which landlords can use as a guide to help them identify the most lucrative areas.

TotallyMoney’s Head of Brand & Marketing Communications, Mark Moloney, said:

“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.

“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.”

For more information, please contact James McCaffrey


Kindly shared by Totally Money