According to Paragon’s lending data for the 12 months to June, Cardiff CF24 had the largest number of BTL mortgages granted. The postcode area includes central Cardiff, which covers part of the city centre, Cathays, Roath, Plasnewydd, Splott and Adamstown.
The report noted that 42% of properties in the area are privately rented and the average yield comes to 8.9%.
It explained that landlords are attracted to the area due to large numbers of NHS staff due to the proximity of the University Hospital of Wales, St David’s Hospital and Cardiff Royal Infirmary, as well as the strong student market due to Cardiff University, Cardiff Metropolitan University and the University of South Wales being in easy reach.
Taking the second spot for BTL investment is new entrant to the list Plymouth with its PL4 postcode.
This has also been driven by a strong student market – with the Arts University Plymouth, Plymouth Marjon University and the University of Plymouth in the vicinity – and key workers at Mount Gould Hospital.
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Rental yields in the area are also high at 10.2%, which is the highest on the top 10 list.
Loughborough’s LE11 postcode area takes the third position, up from eighth last year. The strong performance is also driven by students and large local workforces.
Nottingham’s NG7 postcode stayed stable in fourth position for BTL investment, with Gloucester’s GL1 postcode rounding out the top five.
| Postcode | Weighted rental yield | Most common type of property |
| CF24 – Cardiff | 8.9% | Terraced house |
| PL4 – Plymouth | 10.2% | Terraced house |
| LE11 – Loughborough | 8% | Terraced house |
| NG7 – Nottingham | 8.5% | Terraced house |
| GL1 – Gloucester | 9.6% | Terraced house |
| HU5 – Hull | 9.3% | Terraced house |
| LS6 – Leeds | 8.2% | Terraced house |
| M14 – Manchester | 8.1% | Terraced house |
| B29 – Birmingham | 7.7% | Terraced house |
| ST4 – Stoke-on-Trent | 10.1% | Terraced house |
Louisa Sedgwick, managing director at Paragon Bank, said: “Looking at our lending data covering the 12 months to the end of June, we can see similarities in landlord investment strategies. Our data also shows that landlords typically purchase properties in larger town[s] or cities and within relatively close proximity to universities or large local employers, benefitting from strong and stable demand.
“This support of higher education and healthcare, in addition to important sectors such as software, manufacturing and logistics, highlights the often-overlooked contribution of the PRS to the UK economy.”
She added: “Terraced houses were the property type most often bought by landlords in each of the hotspot locations. Smaller terraces are often more affordable than other property types, making them a good place to start for newer landlords or those looking to expand their portfolios.
“At the other end of the scale, houses of multiple occupation (HMOs) are often classified as terraced properties but benefit from typically higher yields owing to the capacity for multiple tenancies.”
