Postcodes popular with students have reached the list of the top 10
locations for attracting the most ‘buy to let’ investment, research
reveals.
Cardiff’s CF24 postcode, encompassing Cathays and Roath, emerged as the top
choice for BTL investors in 2024, according to Paragon’s lending data.
This area, popular with students attending Cardiff’s three universities,
offers landlords an
average rental yield
of 8.7%.
The research also highlights that areas with large employment markets also
do well with Birmingham’s B29, which includes Selly Oak, home to Queen
Elizabeth Hospital and the University of Birmingham, secured second place,
providing a 7.5% yield.
Plymouth’s PL4, with the University of Plymouth and Mount Gould Hospital,
ranked third, boasting a 9.6% return.
Buy to let landlords
Paragon’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.
“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.”
Other favoured postcodes for BTL investors include LS6 (Leeds), NG7 and NG3
(Nottingham), M14 (Manchester), GL1 (Gloucester), and locations in
Liverpool and Stoke.
Terraced houses were the preferred investment property in most locations,
with converted flats favoured in Nottingham’s NG3.
North East outperforms London in rental yields
Paragon’s report coincides with research from Benham and Reeves which shows
the North East has outperformed London in rental yields over the past five
years.
The North East averaged 4.84%, while London achieved 4.42%.
The firm also says that the North West saw 4.38%, Yorkshire and the Humber
4.29% and the South West 4.03%. The East Midlands had the lowest yield at
3.83%.
Marc von Grundherr, a director of the agency, said: “We’ve seen a
particularly strong performance across the North, with a lower cost of
investment contributing to favourable yields.
“However, where London is concerned, the returns on offer are being very
much driven by a buoyant rental market, fuelled by an overwhelming level of
tenant demand.”
Student landlord looking for investment opportunities
The managing director of Accommodation for Students, Simon Thompson, said:
“If you’re a student landlord looking for promising investment
opportunities in the UK, the 2024 data paints a clear picture.
“Locations with large student populations, like Cardiff’s CF24 and
Birmingham’s B29, continue to be magnets for buy to let investment,
offering attractive rental yields.”
He added: “While student markets offer strong potential, investors should
appreciate whether a particular location could appeal also to other tenant
cohorts, so the investment will remain profitable should there be a
downturn in the student accommodation market.”
