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The UK postcode is split into 2 sections

The first consists of 1 or 2 letters followed by 1 or 2 digits and sometimes followed by 1 further letter; it is at most 4 characters long. This is the outbound code and describes the district of the address. The first letter or two describe the postal town, except for London which uses compass points. The number subdivides the postal town into districts. The final letter appears in central London post codes to create more areas as there are only a single digit number of districts and a high density of addresses.

The second section always consists of a single digit followed by 2 letters. This is the inbound code and represents the postman's round. All three characters are shared by about 5 houses - the exact number depends how big the building are (some building have a unique post code, for example).

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