Property Investment

How to Guarantee the Highest Buy-to-Let Returns

You don’t need a degree to own a buy-to-let property generating the highest rental yields in the country, but to take advantage of these attractive high yields, it helps if you buy that property in a university town, new research has found.

The new statistics show that 17 of the UK’s top 20 postcodes for buy-to-let rental yields are located near a university campus.

The research from lettings platform, Howsy, looked at postcodes commanding the highest rental yields in the UK and found almost all of the top 20 rental yield locations are within a stone’s throw of a university*.

Bradford’s BD1 postcode was found to be the best investment option in the UK. Covering Bradford city centre, BD1 is just a short walk from the University of Bradford, and with the average house price in the area costing £54,938 and local properties commanding an average monthly rent of £468, buy-to-let landlords can secure yields of an impressive 10.2%.

Sunderland’s SR1 was ranked the second-best postcode for property investment with yields of 9.4%. SR1 was closely followed by Liverpool’s L7 postcode, near both the University of Liverpool and the Royal Liverpool University Hospital, that produced yields of 9.3%.

The TS1 postcode close to Middlesbrough train station and Teesside University had yields of 9.2% while the L6 and L1 postcodes, also near the Royal Liverpool University Hospital, produced yields of 9.1% and 8.7% respectively.

Other towns and postcodes generating the highest yields for buy-to-let landlords were Grimsby (DN31), Edinburgh (EH8), Pontypridd (CF37), Glasgow (PA3, G21, G52 & G14), Manchester (M14), Newcastle (NE6), Leeds (LS6) and Nottingham (NG1).

Founder and CEO of Howsy, Calum Brannan, commented: “It’s no coincidence that the vast majority of postcodes with the highest rental yields are found within a stone’s throw of a university campus, and for a safe bet on your investment, these are the places to look when buying.

“While students aren’t always the ideal tenants, they bring consistent demand via an annual flow of new arrivals, the void periods are generally much shorter, and the supply-demand imbalance puts the landlord in control when choosing a tenant.

“As a result, these hot pockets of buy-to-let demand offer landlords an investment option that is almost certain to provide a healthy return despite slower market conditions and uncertain times in the buy-to-let market.”

The top 20 UK postcodes for the highest buy-to-let yields
Location Postcode District Average House Price Average Rent (per month) Average Rental Yield (%) * University Campus
Sandwich, Kent CT13 £388,310 £5,893 18.2% N/A
Bradford BD1 £54,938 £468 10.2% University of Bradford
Greenock, Renfrewshire PA15 £48,609 £394 9.7% N/A
Sunderland SR1 £63,320 £498 9.4% University of Sunderland city campus
Liverpool L7 £95,117 £737 9.3% University of Liverpool & The Royal Liverpool University Hospital
Middlesbrough TS1 £57,452 £442 9.2% Teesside University
Liverpool L6 £88,963 £672 9.1% University of Liverpool & The Royal Liverpool University Hospital
Liverpool L1 £99,908 £728 8.7% University of Liverpool
Grimsby DN31 £63,696 £442 8.3% University of Grimsby
Edinburgh EH8 £226,068 £1,556 8.3% The University of Edinburgh
Pontypridd CF37 £114,784 £776 8.1% University of South Wales – Treforest Campus
Paisley PA3 £64,074 £433 8.1% University of the West of Scotland – Paisley campus
Glasgow G21 £75,733 £511 8.1% Glasgow Caledonian University – Glasgow School of Art
Manchester M14 £176,901 £1,170 7.9% The University of Manchester & Manchester Royal Infirmary
Falkirk FK3 £71,233 £468 7.9% N/A
Newcastle NE6 £122,533 £797 7.8% Newcastle University & Northumbria University
Leeds LS6 £200,126 £1,300 7.8% Leeds University & Leeds Arts University
Nottingham NG1 £133,524 £849 7.6% Nottingham Trent University
Glasgow G52 £89,809 £568 7.6% Queen Elizabeth University Hospital & Glasgow Caledonian University
Glasgow G14 £92,683 £576 7.5% Queen Elizabeth University Hospital & Glasgow Caledonian University
*Average rental yield based on monthly rent multiplied by 12 and then divided by the average house price
Data source: https://propertydata.co.uk/

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Alex Wright, Editor