CategoriesLiverpool

After years of focusing on London and the South, property investors are increasingly looking towards the North of England for better value and future growth. And amongst the major northern cities, there are two which stand out: Liverpool and Manchester.

If you’d like to learn more about the latter, we suggest reading our article about the best buy-to-let areas in Manchester or our buy-to-let investment guide for Manchester.

But if you’d like to learn more about Liverpool, then read on. In this article, we’ll use data to explore the best buy-to-let areas in Merseyside, including the main city of Liverpool and the four surrounding boroughs of Knowsley, St Helens, Sefton, and Wirral.

There’s good reason to be interested in Liverpool’s buy-to-let potential. After it was named the European Capital of Culture in 2008, the city has enjoyed a period of significant growth and progress.

Many areas are undergoing extensive regeneration. Public and private organisations are investing billions each year into the city’s businesses, housing, and infrastructure. The city’s lively culture, sporting prowess, music history make it a fun place to live and visit, with the population growing (especially amongst 22 – 29-year-olds) and the tourism industry thriving (the economic impact of tourism grew 28% in the five years before the pandemic).

This means that demand for property in the city is growing, particularly for rental properties in the most central areas. Both young professionals and students want to live in the centre for easy access to jobs and education. And tourists want to stay centrally when they visit so they can be close to the city’s most famous attractions.

Plus, the average sale price of a property in Liverpool is lower than other hotspots around the country. As of February 2022, it’s just over £205,000 according to Zoopla, compared to £235,948 in neighbouring Manchester.

Altogether, this creates the perfect storm for a property investor. Property is more affordable (and therefore has plenty of room to grow), yet rental demand is high (pushing rental prices up). As a result, an investor stands to achieve excellent rental yields.

So, without further ado, let’s take a look at the data.

To determine the best spots we’ll use two pieces of data: average rental yields and capital appreciation. Rental yields will help us understand the scale of return an investor can expect from a buy-to-let property, whilst capital appreciation will show the long-term value of holding a property.

Top 25 Postcodes In Merseyside By Rental Yield

Postcode Avg Rent Per Month Avg Rental Yield
L4 £602 6.90%
L7 £645 6.60%
L20 £580 6.50%
L2 £749 6.40%
CH41 £576 6.30%
L1 £699 6.20%
L3 £771 5.70%
L5 £580 5.70%
L15 £808 5.60%
L9 £539 5.30%
L13 £565 5.30%
L8 £580 5.20%
CH42 £549 5.10%
CH44 £557 5.10%
L6 £523 5.10%
WA9 £588 5.10%
L12 £864 5.00%
L21 £562 4.80%
WA10 £549 4.60%
WN5 £622 4.50%
L25 £945 4.40%
WA11 £653 4.40%
WN4 £597 4.40%
L37 £1,187 4.20%
WA8 £638 4.00%

This table shows where the highest rental yields, a cornerstone of any buy-to-let investment, can be achieved across Merseyside.

The highest average rental yields in the city are found in the L4 postcode district, Anfield. The area contains the famous stadiums of Premier League football clubs, Liverpool and Everton, which are separated by the expansive Stanley Park.

Property in the area is lower than many other postcodes in Liverpool (just £104,049), which seems to be driving the higher rental yields. A similar reason explains CH41, covering Birkenhead. The area sits on the opposite side of the Rivery Mersey from the city centre, connected by the Kingsway and Queensway Tunnels. Properties in CH41 have an average price of £109,723.

The rest of the top 25 is largely dominated by postcodes within the City of Liverpool. The city centre does particularly well, with the likes of L1, L2 and L3 all ranking highly. Given these areas have seen numerous regeneration projects and the rise of many high-end residential aprtment blocks in the past few years, this is no surprise.

Student heavy areas rank highly too. With two major universities in the city, the student population drives a healthy rental yields hotspots such as Wavertree (L15), Toxteth (L8), Kensington (L6) and Edge Hill (L7).

Top 25 Postcodes In Merseyside By Property Value Growth

Postcode Avg Asking Price 5 Year Growth
L1 £134,297 99.00%
L20 £107,363 51.00%
L7 £117,565 48.00%
L6 £123,686 47.00%
L27 £120,417 45.00%
L34 £210,978 44.00%
CH48 £415,274 42.00%
L4 £104,049 42.00%
L15 £172,701 42.00%
L25 £260,793 39.00%
L5 £121,633 37.00%
CH60 £442,867 36.00%
L18 £319,842 36.00%
L23 £268,939 35.00%
CH46 £194,929 34.00%
CH47 £319,102 34.00%
L13 £128,267 34.00%
L17 £230,393 34.00%
CH44 £132,030 33.00%
CH43 £199,313 33.00%
CH61 £276,027 32.00%
L3 £162,910 31.00%
L12 £206,499 31.00%
CH45 £194,030 31.00%
L10 £177,275 30.00%

This table shows the areas of the city that have seen the highest growth in property values over the past five years.

L1, right in the middle of the city centre, has seen a near 100% increase in values in the past five years. It’s a stunning level of growth that has been aided by the regeneration and development of some of the city’s busiest and most important areas – from Albert Docks and the Baltic Triangle, stretching out to St George’s Quarter and the Knowledge Quarter.

Nowhere else in Merseyside comes close, with L20 (Bootle) a distant second place, albeit with a strong 51% increase in values.

We see more representation from CH postcodes in this table. Many of which fall within the most affluent areas of the Wirral, a highly sought-after peninsula just across the River Mersey from Liverpool city centre. West Kirby (CH48), Hoylake (CH47), Lower Heswall and Geyton (CH60) are particularly popular spots.

But, importantly for any property investor, many of the central postcodes that achieved strong yields also appear in this table. The likes of L1, L3, L4, L5, L6 and L7 all offer excellent yields, show strong growth in values, yet are still available at entry-level prices. Savvy investors should be focusing in on these areas, given growth is set to continue.

So, Where Are the Best Buy-to-Let Areas in Liverpool?

The best buy-to-let properties offer a well-balanced mix of rental yields and growth in property value (capital appreciation).

So we’ve taken the data from the tables above and combined it. The scoring system is fairly simple. There are 59 postcodes within our dataset. The postcode with the highest rental yield receives 59 points. The second best receives 58 points. And so on.

The same is applied to the five year growth values. The postcode with the highest growth receives 59 points. The second best receives 58 points. And so on.

We then weighted the scores. Rental yield scores were multiplied by two, whilst capital appreciation scores were not. This places emphasis on yield, which takes slight precedence for buy-to-let investors.

Then, the points have been added together to calculate a final score, by which the results are ordered. Here are the results:

Postcode Avg Yield Yield Score Avg Asking Price 5 Year Growth Growth Score Combined Score
L7 6.60% 116.00 £117,565 48.00% 57.00 173.00
L20 6.50% 114.00 £107,363 51.00% 58.00 172.00
L4 6.90% 118.00 £104,049 42.00% 52.00 170.00
L1 6.20% 108.00 £134,297 99.00% 59.00 167.00
L5 5.70% 106.00 £121,633 37.00% 49.00 155.00
L15 5.60% 102.00 £172,701 42.00% 51.00 153.00
L6 5.10% 94.00 £123,686 47.00% 56.00 150.00
L13 5.30% 100.00 £128,267 34.00% 43.00 143.00
L3 5.70% 104.00 £162,910 31.00% 38.00 142.00
CH41 6.30% 110.00 £109,723 27.00% 28.00 138.00
CH44 5.10% 92.00 £132,030 33.00% 41.00 133.00
L8 5.20% 96.00 £134,249 30.00% 34.00 130.00
L25 4.40% 78.00 £260,793 39.00% 50.00 128.00
L12 5.00% 86.00 £206,499 31.00% 37.00 123.00
WA9 5.10% 90.00 £139,400 28.00% 30.00 120.00
L21 4.80% 84.00 £140,750 29.00% 33.00 117.00
L18 3.90% 68.00 £319,842 36.00% 47.00 115.00
CH42 5.10% 88.00 £128,408 27.00% 27.00 115.00
L17 3.70% 62.00 £230,393 34.00% 42.00 104.00
L9 5.30% 98.00 £122,571 13.00% 5.00 103.00
CH45 3.80% 66.00 £194,030 31.00% 36.00 102.00
WN5 4.50% 80.00 £164,139 25.00% 22.00 102.00
L23 3.40% 54.00 £268,939 35.00% 46.00 100.00
WN4 4.40% 76.00 £161,148 25.00% 21.00 97.00
CH43 3.50% 56.00 £199,313 33.00% 40.00 96.00

So there you have it. The best buy-to-let area in Liverpool is L7, which covers Edge Hill and Kensington. The postcode generates an excellent average rental yield thanks to a high student population. Meanwhile, purchase prices have increased by 48% over the past five years. This is nowhere near the level of growth seen in L1 (+99%), but it is strong in relation to other postcodes.

The results suggest buy-to-let investors stand to benefit greatly from Liverpool’s central areas, with the top five positions rounded out by L4, L1 and L5. For those seeking something out of the city centre, Bootle’s L20 is a good choice.

Summary

Buy-to-let in Liverpool, especially in the most central areas, is well worth consideration. Generally, the property prices are not as high as those found in Manchester, making the city a more affordable location for investors.

Of course, this does mean rental values aren’t as high either, but Liverpool is on the same trajectory as its neighbouring city. For example, the data shows a sharp increase in property prices over the past five years. Research suggests they’re rising quicker than anywhere else in the country. And with a growing population of young professionals in the city centre, you can expect rental prices to follow.

If you’re interested in purchasing a buy-to-let property in Liverpool, please get in touch with our team.

We’ve helped hundreds of investors, from all around the world, find the right property for their requirements, budgets and goals. We’re a property investment company operating across Liverpool and the North of England.

We can help with every step of the investment process. And our expertise, due diligence, and connections mean we can source excellent opportunities. We don’t charge a fee for our service and we’re members of the Property Ombudsman. Please contact us to learn more.

About this data

The data in this article comes from PropertyData. It is an accurate representation of the Merseyside property market as of February 2022. We’ll update this report next year, in 2023, with fresh data.

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