New data from Paragon Bank reveals the top buy-to-let investment hotspots in the UK, highlighting the strategic thinking of landlords in the current market. The lender’s analysis of mortgage data for the 12 months to the end of June shows a clear trend: landlords are prioritizing locations with strong, stable tenant demand from universities and large employers.

Cardiff Takes the Top Spot

Cardiff’s CF24 postcode has emerged as the UK’s leading buy-to-let hotspot, climbing from fifth place last year. With 42% of properties in the area being privately rented and average rental yields of 8.9%, it’s a prime location for investors. The area’s appeal is largely driven by its proximity to several hospitals, attracting NHS staff, and three major universities, providing a steady stream of students.

A Focus on High Yields and Affordability

Plymouth’s PL4 postcode is a new entry to the list, securing the second spot with the highest average rental yields of all the hotspots at an impressive 10.2%. The area’s attractiveness lies in its lower-than-average property prices and a robust tenant base from three universities and a local hospital.

Other top-performing postcodes include:

• LE11 in Loughborough: Ranked third, with an average yield of 8.0%, fueled by Loughborough University and a large local workforce.
• NG7 in Nottingham: Held its place as the fourth most popular buy-to-let postcode, with a strong average yield of 8.5%.
• Other Returning Hotspots: Stoke-on-Trent’s ST4, Birmingham’s B29, and Manchester’s M14 also remained popular investment locations.

Terraced Houses Dominate the Market

The data shows that in all of the top hotspot locations, the most common type of property purchased by landlords was a terraced house. These properties are often more affordable, making them an accessible option for new landlords or those looking to expand their portfolios. They also lend themselves to Houses in Multiple Occupation (HMOs), which can generate higher yields due to the capacity for multiple tenants.

According to Louisa Sedgwick, managing director at Paragon Bank, this strategic investment highlights the often-overlooked contribution of the private rented sector to the UK economy, particularly in supporting higher education and healthcare.