Collection not done, found out Royal Mail have the incorrect postcode.

Buyer is now waiting for an item that has not and will not be collected. No way to alter address for collection. I can only contact the buyer through Ebay messaging, and postage is already paid? Do not know how to resolve for the buyer. ??

Ask the buyer to open a "not received" case.  If you used Simple Delivery eBay will issue the refund themselves and you keep the original payment.