With a raft of legislative changes, the removal of tax allowances and incentives, and now the general economic uncertainty of Brexit, buy to let (BTL) landlords may be understandably anxious about turning a profit on their businesses.
The ability to do so, of course, depends on the price of the property in which to invest, the availability of a ready market of tenants, and the rental yield achievable.
Naturally enough, there are various attempts to put all of these variables into the melting pot and forecast the best postcodes for BTL investment.
There are no hard and fast rules for successful investment, of course, and postcodes are chosen because of the variation across regions, cities and metropolitan areas.
Some postcode picks
Citing research from a London estate agent, Property Investor Today recently revealed that the top picks for the capital were almost all in the east of London, where buy to let properties in E6 (East Ham) and IG11 (Barking) are achieving yields of 5% and RM8, RM9 and RM10 (Romford) are all realising an average of 4.9% rental yields.
Outside of East London, 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%. The only postcode south of the river to appear is SE28.
The rest of the UK
Perhaps contrary to expectations, though, and given the very high price of property anywhere in London, the best postcodes for BTL investment are all outside the capital, says the article.
Picking up on the research, Landlord Today, for example, revealed that the most profitable area for buy to let landlords is likely to be postcode L7 in Liverpool, where rental returns of an impressive 10.7% are being reported (thanks largely to the large student population in the city and the low price of housing which currently fetches an average of only £105,000).
Similar circumstances in other postcodes in the northeast, northwest and north Midlands also make them favourable hotspots for BTL investment, with selected parts of Middlesbrough, Bradford, Manchester, Sunderland, Middlesbrough, Sheffield, Newcastle, and Nottingham all returning yields of between 8.50% and 10.2%.
An alternative approach
For some landlords, however, the current rental yield alone might not be the one and only measure of profitability – capital appreciation on the property, the prospects for future growth in potential rents and activity (in both sales and lettings) in the local market, are all additional factors which may be taken into account.
Property finance specialists Lendinvest therefore broaden their analysis to reveal to compile their national Buy to Let Index which identifies alternative BTL investment hotspots in areas such as Colchester in Essex, Stockport, Manchester and Leeds (in that order) for landlords looking to invest in the North of England, Wolverhampton and Peterborough in the Midlands, and Luton in the southeast of England.
At the end of the day, therefore, it is likely that many towns, cities and areas of England offer promising prospects for buy to let investment and, with appropriate research and carefully chosen purchases, you may be able to identify your own particular BTL investment hotspots.