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New research has shown that some postcode areas are outperforming others in

terms of buy-to- let properties. Capital gains and rental yield were just two of the

elements considered in the research by LendInvest. Rental price growth was

another key factor.

The research has also shown which areas are bottom in the buy-to- let postcode

league tables. Before we look at those, let’s focus on the areas would-be landlords

should be considering in the current marketplace.

Luton is the best area to go for

It remains to be seen how long this will last for, particularly if landlords flood the

market in the area given this research. However, Luton currently offers an average

yield of 4.54%, with capital gains of 12.83%. The rental price growth seen in the

area currently amounts to 7.37%.

Stevenage comes in second, with a lower yield of 4.05% and a lower capital gains

of 11.64%, but a higher rental price growth percentage of 7.47%. The figures

gleaned from the research are taken together to present the overall standing of an

area.

The rest of the top five is completed by Rochester in Kent, Colchester in Essex, and

Dartford, also in Kent. From there, the top 10 is completed with the following

areas:

 Peterborough

 Southend-on- Sea

 Manchester

 Canterbury

 Romford

So, we have yet another Kent area there, plus another in Essex. Interestingly,

Romford in Essex was previously in first place, but has since suffered a drop in both

rental yields and capital gains.

“Strongly-performing areas”

“The new data shows which postcodes landlords should currently be interested in if

they are looking to invest in property,” says Darren Pescod, managing director of

The Mortgage Broker Ltd. “Strongly-performing areas will always change, as we

have seen with Romford, but the overall data can give landlords a better idea of

which areas look to be more profitable than others. It can also help them avoid

underperforming areas more easily.”

The bottom 10 postcodes

As for the worst-performing postcodes, these are Sunderland, Lancaster,

Darlington, Preston, Llandudno, Plymouth, Western Central London, North West

London, West London, and Galashiels. Three entries for London postcodes might

surprise some, but Western Central London saw yields of 3.75% and capital gains

of just 3.18%. Meanwhile, North West London was in a similar position, with a

3.70% yield and a slightly better capital gains figure of 3.84%. West London’s

figures were a stark contrast even to those, with a yield of 2.94% against capital

gains of just 1.74%. Galashiels, coming in last, had a yield of 3.98% against capital

gains of a mere 1.60%.

Of course, the picture can and does change frequently. This may be particularly

true if landlords make their decisions based on this data. It may encourage some to

avoid the worst-performing areas to concentrate on the better ones. Additionally, it

is best to put your money in the best places if you can. No doubt some landlords

will act on this data to try and make the most of their buy-to- let portfolio.