Recent research by London sales and letting agent Benham and Reeves has highlighted which areas across London and the UK offer the best buy-to-let yields.
It used statistics from PropertyData based on the average property price and rental potential of each postcode to highlight where is still a sound investment when looking for a healthy return.
Despite uncertainty looming over the London market, Benham and Reeves unveiled pockets of the capital that offer rental yields as high as 5%.
The data revealed the E6 postcode in East London as the best bet for buy-to-let investors in the capital, along with IG11, which covers Barking. Both locations offer a rental yield of 5%.
In fact, East London dominated the top 10 most lucrative buy-to-let postcodes, with Romford postcodes RM8, RM9 and RM10 also amongst the best with rental yields of 4.9%.
What’s more, N18, which straddles the North Circular, is one of the only postcodes outside of East London to make the list with a rental yield of 4.8%. SE28 was the only postcode south of the river to appear. E15 and EN3 completed the top 10.
The best postcode outside of the capital was Liverpool’s L7 postcode. With an average price of just £105,000, the area offers an average rental yield of 10.7%.
This was closely followed by the neighbouring L6 postcode where yields are currently 10.4%. Middlesbrough, Manchester, Bradford, Sunderland, Newcastle, Sheffield and Nottingham were also home to some of the best postcodes for the highest rental yields.
Marc von Grundherr, director of Benham and Reeves, commented: “The DNA of the London rental market is so complex that it pays to consider where to invest on the most granular level possible when looking at the buy-to-let market.”
He said that while there are a host of factors that affect the rental desirability of a property, one of the best starting points to work from is the rental yield available. And, despite challenges hitting the sector, buy-to-let remains a lucrative business with plenty of ‘honey pots’ that can bring a great return on your investment.
“Of course, London’s more prime postcodes are always a safe bet, attracting investment due to their prestigious image and positioning,” he continued. “While we may have seen some decline in price growth due to political uncertainty, they remain very much in demand from a rental point of view and so far, those with the budget to buy there, a return isn’t hard to come by.”
He concluded: “They also offer better capital growth than London’s peripherals and for those not completely dependent on yield but preferring to opt for more long-term growth, inner London is still the go-to place to invest in the capital’s buy-to-let market.”