Student cities and employment hubs top buy to let hotspots

Cardiff, Birmingham and Plymouth have emerged as prime locations for buy to let investment, according to Paragon Bank’s 2024 lending data.

It says that Cardiff’s CF24 postcode in Cardiff, encompassing Cathays and Roath, led the pack, attracting landlords keen to house the city’s large student population.

Paragon says that BTL investors there can see average returns of 8.7%.

Birmingham’s B29, including Selly Oak, home to the University of Birmingham and Queen Elizabeth Hospital, secured second place.

This area offers a mix of student and professional tenants, with yields around 7.5%.

Concentrations of BTL investment

The lender’s head of surveyors, Neil Smith, said: “Looking at last year’s most popular postcodes amongst Paragon’s buy to let landlords highlights geographical concentrations of investment.

“Even though privately rented homes are in short supply all over the UK, landlords are strategic and often target locations with consistently high demand; cities where we see large transient populations, such as students and temporary workers, alongside more permanent residents like young professionals and families.”

He added: “There is also a notable propensity amongst buy to let landlords to invest in property types that can deliver strong yields, often terraced houses and HMOs.

“While serving distinct markets has advantages, it is wise to consider if a particular location could also appeal to other tenant cohorts to help investments remain profitable if there is a downturn in the primary market.”

Properties favoured by BTL landlords

Plymouth’s PL4, with its universities and hospital, mirrored the top two, appealing to similar tenant demographics and it has the second-highest yield of 9.6%.

Other popular postcodes include LS6 in Leeds, NG7 and NG3 in Nottingham, M14 in Manchester, GL1 in Gloucester and areas in Liverpool and Stoke.

Terraced houses were the most sought-after property type, except in Nottingham’s NG3, where flats were favoured by BTL landlords.