Nottingham tops table for highest buy-to-let yields

Nottingham offers the highest buy-to-let yields, new research has claimed.

Credit experts TotallyMoney has released a report today which indicates that university cities offer some of the highest buy-to-let yields, making them potentially the most lucrative hotspots for landlords.

The free credit report company surveyed more than 580,000 properties across England, Scotland, and Wales to rank postcodes in order of highest buy-to-let yields, to lowest.

The research showed locations with a high student population — like Nottingham, Liverpool, Manchester, Leeds, and the North East — boast some of the UK’s highest rental yields.

Nottingham is the city that soars to the top, with two postcodes featuring in the top five. NG1 takes first place with an average rental yield of 11.99%, and NG7 takes fifth place with an average yield of 8.89%.

Property prices are also affordable, averaging £152,631 and £160,269 respectively — far below the UK average of £226,906.

It has a student population of more than 37,000.

Liverpool takes second place, with two postcodes in the top five, and five postcodes in the top 20.

It has a student population of around 70,000, as well as three universities, which is thought to contribute highly to its strong yields.

Postcode L7 takes second place and has average rental yields of 9.79%.

L1 also performs well, taking fifth place, with average yields of 9.33%.

Like all things property-related, London struggled to perform well compared with its UK counterparts.

North London, in particular, was a poor performer, with five postcodes in the bottom 10.

Highgate in N6 was the worst postcode in the capital and third from bottom overall, with paltry yields of just 1.93%.

Landlords whose hearts are set on the capital need to head east for the best return on investment.

E6 in East Ham offers the best London yields at 4.81%, with Stratford (E15), Plaistow (E13), Poplar (E14), and Chingford (E4) all ranking in the London top 10.

It’s thought that higher-than-average house prices and tighter mortgage-lending criteria have contributed highly to the poor rental yields in London.

Some buy-to-let mortgage providers now require rental payments to cover mortgage repayments by a surplus of 45%, making it harder for landlords to turn a profit.

Based on the research, TotallyMoney has created an interactive map, which landlords can use as a guide to help them identify the most lucrative areas.

TotallyMoney’s head of brand and marketing communications, Mark Moloney, said: “With students flocking to university cities year after year and looking for a place to live, it’s no surprise the student market is a dependable one for landlords.

“Since so many students are looking for accommodation, landlords may use this as an opportunity to drum up competition between them.

“But, due to the tenant fee ban, changes in mortgage tax relief, and tighter buy-to-let lending criteria, rental profits are now being squeezed more than ever.”