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Best buy-to-let areas with the UK’s highest rental yields

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December 10, 2019
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When you’re thinking of purchasing a buy-to-let property, there are lots of factors to consider. You need to think about things like average rental prices in the area, how much the property will cost to maintain and upfront legal and search fees and more. The most important figure for you to calculate is probably the rental yield.

If you’re researching the best area in the UK for a buy-to-let purchase, then our information about the areas that offer the best buy-to-let yields will help. We’ve collected data from Home.co.uk, Gov.uk and Which?, and used it to establish the best areas and postcodes in the UK for a buy-to-let property.

Rather than simply comparing average house purchase prices with average yearly rentals, we’ve also considered the average price of stamp duty, along with typical additional costs such as yearly maintenance and landlord insurance. This helps to give a more accurate picture of your likely rental yields.

Best rental yields in the UK

Based on data from Home.co.uk, we’ve created this overview of the parts of the UK where you’ll find the best buy-to-let rental yields. Scotland, North West England and Northern Ireland all boast high yields across the board, while southern England doesn’t get a look-in. For more information on the specific cities and postcodes that could offer the highest return on your investment, keep reading below.

Best buy-to-let areas

Liverpool, Kilmarnock and Glasgow all offer vast potential. Of the top 50 highest-yielding buy-to-let areas in the UK, six are in Kilmarnock, six are in Liverpool and four are in Glasgow. Manchester also boasts four top 50 placements, while the number one spot goes to a single postcode in the small town of Portrush, north of Belfast.

Liverpool

  • Six Liverpool postcodes offer high returns on investment for buy-to-let landlords: L4, L6, L7, L9, L20 and L33. L4 offers the highest yield, at an impressive 8.96%.
  • The L4 postcode covers Anfield Football Stadium and Goodison Park – home to Liverpool and Everton FCs – as well as Walton Hall Park and Stanley Park. Homes in this zone fall into the Anfield, Kirkdale and Walton districts and are in close proximity to a range of supermarkets, restaurants and shops.

Kilmarnock

  • The area around Kilmarnock offers ample choice for a buy-to-let location, with postcodes in the UK top 50: KA1, KA8, KA13, KA18, KA20 and KA24. As well as Kilmarnock itself, these postcodes also include the surrounding towns and villages of Cumnock, Dalry, Stevenston, Ayr, and Kilwinning.
  • The average cost of a two-bedroom property in these postcodes sits between £54,774 (KA18) and £70,912 (KA1) with the best buy-to-let rental yield found in Cumnock (KA18) where you can expect an average yield of 8.52%.

Glasgow

  • Glasgow’s G21 postcode has the highest average estimated buy-to-let yield in the area at 8.35% and average two-bedroom property prices sitting at £68,879.
  • Neighbouring G31 also features in the top 50, alongside G52 and G67. According to a report from Property Investments UK, Glasgow is currently one of the most popular areas in the United Kingdom for buying, selling and letting property. Tenement flats are typically affordable and easy to manage for landlords, and sought-after by tenants.

Buy-to-let hotspots

Student cities are often buy-to-let hotspots, thanks to their consistent annual influx of new students looking for homes. Manchester and Sheffield both feature frequently in the list of the UK’s highest rental yield areas. Along with Liverpool, these cities definitely fall into the buy-to-let hotspot category.

Manchester

  • Manchester is home to four universities, with The University of Manchester and Manchester Metropolitan University standing as the biggest and most well-known. The university student population here is around 90,000.
  • M8, M9, M18 and M22 all offer yields between 7.24% and 7.58%, with the Blackley, Higher Blackley and Harpurhey areas boasting the best return on investment.

Sheffield

  • With around 60,000 students undertaking higher education courses in Sheffield, the pool of potential tenants remains sizeable and steady.
  • The S4 postcode offers buy-to-let rental yields of 8.36%, placing it in the top 10 areas across all of the UK to invest in rental property.

Best buy-to-let yields by postcode

Here are the UK’s top 50 buy-to-let yields by postcode:

PostcodeLocationAverage priceAverage stamp dutyAverage other costsAverage total priceAverage yearly rentalAverage estimated yield
BT56Belfast£166,962£5,848£2,905£175,715£16,1289.18%
PE3Peterborough£131,775£4,089£2,905£138,769£12,7209.17%
ML9Motherwell£80,786£2,424£2,165£85,375£7,6929.01%
L4Liverpool£53,571£1,607£2,165£57,343£5,1368.96%
KA18Kilmarnock£54,774£1,643£2,165£58,582£4,9928.52%
TS1Teeside£58,456£1,754£2,165£62,375£5,3048.50%
DN31Doncaster£58,935£1,768£2,165£62,868£5,3048.44%
HD1Huddersfield£93,263£2,798£2,165£98,226£8,2688.42%
PA3Paisley£61,040£1,831£2,165£65,036£5,4488.38%
S4Sheffield£65,727£1,972£2,165£69,864£5,8448.36%
G21Glasgow£68,879£2,066£2,165£73,110£6,1088.35%
L6Liverpool£69,505£2,085£2,165£73,755£6,0008.14%
KA24Kilmarnock£60,434£1,813£2,165£64,412£5,2208.10%
CV4Coventry£113,845£3,415£2,905£120,165£9,7208.09%
ML4Motherwell£70,666£2,120£2,165£74,951£6,0248.04%
BT12Belfast£70,987£2,130£2,165£75,282£6,0488.03%
EH8Edinburgh£195,000£7,250£2,905£205,155£16,3087.95%
KA20Kilmarnock£58,434£1,753£2,165£62,352£4,9567.95%
PE1Peterborough£119,280£3,578£2,905£125,763£9,9487.91%
FK3Falkirk£61,543£1,846£2,165£65,554£5,1487.85%
L7Liverpool£83,660£2,510£2,165£88,335£6,8767.78%
G67Glasgow£58,930£1,768£2,165£62,863£4,8487.71%
KA1Kilmarnock£70,912£2,127£2,165£75,204£5,7967.71%
B18Birmingham£139,901£4,495£2,905£147,301£11,3167.68%
BT62Belfast£60,857£1,826£2,165£64,848£4,9327.61%
KA8Kilmarnock£67,315£2,019£2,165£71,499£5,4367.60%
M9Manchester£88,149£2,644£2,165£92,958£7,0447.58%
BD1Bradford£86,059£2,582£2,165£90,806£6,8647.56%
PA15Paisley£65,647£1,969£2,165£69,781£5,2567.53%
L33Liverpool£74,842£2,245£2,165£79,252£5,9647.53%
CV1Coventry£150,883£5,044£2,905£158,832£11,8927.49%
KA13Kilmarnock£68,275£2,048£2,165£72,488£5,4247.48%
G31Glasgow£93,971£2,819£2,165£98,955£7,3927.47%
M22Manchester£136,076£4,304£2,905£143,285£10,6807.45%
L20Liverpool£66,744£2,002£2,165£70,911£5,2327.38%
PR1Preston£89,800£2,694£2,165£94,659£6,9847.38%
LS12Leeds£102,856£3,086£2,905£108,847£8,0047.35%
B43Birmingham£117,262£3,518£2,905£123,685£9,0847.34%
L9Liverpool£71,220£2,137£2,165£75,522£5,5447.34%
M8Manchester£90,270£2,708£2,165£95,143£6,9727.33%
CH44Chester£69,481£2,084£2,165£73,730£5,4007.32%
CH41Chester£75,718£2,272£2,165£80,155£5,8447.29%
CV5Coventry£157,324£5,366£2,905£165,595£12,0487.28%
CF43Cardiff£57,013£1,710£2,165£60,888£4,4287.27%
M18Manchester£82,358£2,471£2,165£86,994£6,3007.24%
NN1Northampton£119,581£3,587£2,905£126,073£9,1207.23%
HU6Hull£90,719£2,722£2,165£95,606£6,9127.23%
DN1Doncaster£74,251£2,228£2,165£78,644£5,6767.22%
G52Glasgow£85,822£2,575£2,165£90,562£6,5287.21%
CF47Cardiff£70,359£2,111£2,165£74,635£5,3767.20%

 

 

What is a good rental yield?

Rental yield is the return made on a property investment in terms of monthly rent charged, compared to the price paid for the property. As a general rule, 7% or higher is a good buy-to-let yield, while 9% or higher is excellent.

To get a sense of potential rental yields on your property, or a property you’re looking to purchase, you can use our handy rental yield calculator. Just enter a few details about the house price, rental price and any one-off or recurring fees and we’ll tell you what your buy-to-let yield will be.

There is no exact science to working out your maintenance costs, so try to be realistic about the likely differences between purchasing older and newer properties.

What is a good rental yield in London?

Purchasing property in London can be very expensive, and while this is matched by high average rents, typical yields are much lower than in other parts of the UK. In fact, a substantial number of the UK’s worst performing postcodes for buy-to-let rental yields are in London and Greater London. Anything over 4% is considered a good rental yield in London.

Out of all London postcodes, many of the areas with the smallest return on investment are in North London, and as such this is an area best avoided by landlords looking for a good return.

According to TotallyMoney, East Ham and Hammersmith offer the highest buy-to-let rental yields in London at 4.81% and 4.47% respectively. Hemel Hempstead and Crewe are the worst areas available, offering low yields of just 1.91% and 1.88%.




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