According to estate agents Savills, buy-to-let investments fell in 2017 due to smaller profit margin caused by the rise of stamp duty and the decrease of tax relief on commercial mortgage interest payments. To make profitable investments, landlords are selective on which areas they invest in.
The top Liverpool postcodes are L7, with average rental yields of 11.79%, and L6 at 11.59%. Both are close to the city’s universities, where many students live in rented accommodation.
Behind Liverpool in the top ten are the Middlesbrough postcode of TS1, EH8 (Edinburgh), M14 (Manchester), NE6 (Newcastle), L1 (Liverpool), PR1 (Preston), M19 (Manchester) and FY8 (Blackpool). In these areas, average rental yields are between 8.53% and 10.94%.
London, with a high amount of rented accommodation, does not feature in the top 10 list due to the high cost of property in the capital. The worst performing areas outside of London are Bournemouth BH14 with average rental yields of 1.68%, while CW12 (which includes Congleton, Cheshire) offers only 1.74% returns.
Many London landlords are looking to the North of England for better returns. Manchester has a student population of 100,000, many living in the M14 postal area close to Manchester Metropolitan University and the University of Manchester.
There are plenty of buy-to-let commercial mortgage deals available for landlords investing in these top postcode areas.