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
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
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.
“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.