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The UK has unusually detailed postal location codes. There are about 2 million unique postcodes in use at any one time. Each code represents a business or a couple of handfuls of household delivery locations. The overall data is updated frequently as old locations are removed from use and new codes are issues because new housing are businesses are created.

What is the best source for the geographic locations (e.g. the lat/lon centroids) of those postcodes? What restrictions apply to their use?

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Ordnance Survey is an open data site you may find helpful.

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I've recently come across another useful site giving not just postcode locations (as both LatLon and OS grid reference) but also the mappings from postcodes to all higher geography units.

The census service provides a large lookup table (see different current and older versions here) for all postcodes (including retired ones) to higher geographies and the latest version includes the exact location of the mean postcode centroid. As far as I remember, previous versions did not include everything in the current version (especially LatLon location). This now makes this file incredibly useful as it includes both the detailed location and the mapping to most higher geographies therefore saving a great deal of faffing about with other lookup tables (though most lookups give just codes, so if you want the names of the higher units, like local authority or health areas, you still need to have some additional tables. These are supplied separately with the core table from the same source).

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