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 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 a tourism industry on the post-pandemic recovery path.
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 in other hotspots around the country. As of March 2023, it’s just under £200,000 according to Zoopla, compared to £253,000 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 10 Postcodes In Merseyside By Rental Yield
| Postcode | Avg asking rent (pm) | Avg yield |
|---|---|---|
| L4 | £681 | 7.10% |
| L11 | £837 | 6.90% |
| L20 | £634 | 6.30% |
| CH41 | £626 | 6.20% |
| L5 | £688 | 6.00% |
| L21 | £690 | 5.70% |
| L3 | £815 | 5.60% |
| L13 | £644 | 5.50% |
| L1 | £698 | 5.40% |
| L14 | £803 | 5.40% |
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 valued lower than many other postcodes in Liverpool (just £114,671), which seems to be driving the higher rental yields.
The rest of the top 10 is largely dominated by postcodes within the City of Liverpool, apart from CH41 in fourth place, covering Birkenhead. The area sits on the opposite side of the River Mersey from the city centre, connected by the Kingsway and Queensway Tunnels. Similar to L4, it’s yield performance is likely helped by lower-than-average property values, with the average property worth £121,785.
The city centre does particularly well, with both L1 and L3 ranking highly. Given these areas have seen numerous regeneration projects and the rise of many high-end residential apartment blocks in the past few years, this is no surprise.
Top 10 Postcodes In Merseyside By Property Value Growth
| Postcode | Avg asking price | 5yr value growth |
|---|---|---|
| L1 | £155,129 | 86% |
| L6 | £136,156 | 56% |
| L32 | £137,829 | 54% |
| L13 | £139,892 | 52% |
| L28 | £117,496 | 50% |
| L3 | £176,012 | 48% |
| L34 | £263,705 | 44% |
| L20 | £120,723 | 43% |
| CH64 | £345,726 | 43% |
| L4 | £114,671 | 42% |
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 an 86% 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 L6 a distant second place, albeit with a strong 56% increase in values.
Again, we see representation from CH postcodes in this table, with CH64 in 9th. This postcode is part of the Wirral Peninsula, one of the most affluent and highly-sought after areas in Merseyside, located just across the River Mersey from Liverpool city centre. CH64 contains villages such as Neston, Parkgate, Puddington, and Willaston.
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, L13, and L20 all display excellent yields and strong growth in values, yet are still available at entry-level prices. Savvy investors should be focusing 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 56 postcodes within our dataset. The postcode with the highest rental yield receives 56 points. The second-best receives 55 points. And so on.
The same is applied to the five-year growth values. The postcode with the highest growth receives 56 points. The second-best receives 55 points. And so on.
We’ll also weigh the scores. Rental yield scores are multiplied by two, whilst capital appreciation scores are 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 | 5yr value growth | Growth Score | Combined Score |
|---|---|---|---|---|---|
| L4 | 7.10% | 112 | 42% | 47.00 | 159.00 |
| L20 | 6.30% | 108 | 43% | 49.00 | 157.00 |
| L1 | 5.40% | 96 | 86% | 56.00 | 152.00 |
| L3 | 5.60% | 100 | 48% | 51.00 | 151.00 |
| L13 | 5.50% | 98 | 52% | 53.00 | 151.00 |
| L21 | 5.70% | 102 | 38% | 41.00 | 143.00 |
| L6 | 4.90% | 86 | 56% | 55.00 | 141.00 |
| CH41 | 6.20% | 106 | 31% | 31.00 | 137.00 |
| L14 | 5.40% | 94 | 34% | 34.00 | 128.00 |
| L22 | 4.50% | 80 | 42% | 46.00 | 126.00 |
So there you have it. The best buy-to-let area in Liverpool is L4, which covers Anfield, Goodison Park, and Walton. The postcode generates an excellent average rental yield of 7.1% which tips the scales in its favour. Meanwhile, purchase prices have increased by 42% over the past five years. This is nowhere near the level of growth seen in L1 (+86%), but it is well above the regional average of 30%.
For those seeking something out of the city centre, Bootle’s L20 is a good choice. In 2013, This Is Money named Bootle a “buy to let boomtown”, with it proving extremely popular with renters.
The results also suggest buy-to-let investors stand to benefit greatly from Liverpool’s central areas, with the L1 and L3 postcodes taking third and fourth. These postcodes offer true city-centre living in Liverpool and appeal to young professionals who want to be close to all the bars, restaurants and amenities on offer.
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 – perfect for entry-level 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.
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About this data
The data in this article comes from PropertyData. It is an accurate representation of the Merseyside property market as of March 2023. We’ll update this report next year, in 2024, with fresh data.