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Top 10 buy-to-let hotspots revealed – Paragon Bank

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  • 09/04/2024
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Top 10 buy-to-let hotspots revealed – Paragon Bank
Manchester’s student districts made up the most popular buy-to-let hotspot for portfolio landlords last year, netting landlords an average rental yield of 7.5%.

The M14 postcode ranked number one of the top 10 buy-to-let (BTL) hotspots to invest in during 2023, according to Paragon Bank’s lending data.

Covering Manchester’s Fallowfield, Rusholme, Old Moat, and Ladybarn districts, and locations between the University of Manchester and Manchester Metropolitan University, landlords were attracted to the area by the high student population.

Birmingham’s B29 postcode, covering the Selly Oak, Bournville, Edgbaston, Kings Heath, Northfield and Stirchley districts, came second. The area is also home to a large student population, especially Selly Oak, the location of Birmingham University.

Close by in neighbouring Edgbaston is the Queen Elizabeth Hospital, a notable local employer as one of the UK’s largest single-site hospitals.

Portfolio landlords investing in this postcode area can expect to earn an average yield of 6.9%.

 

‘Proximity to universities or large employers’ is a trend

Although properties in the sought-after Birmingham postcode are the most expensive on Paragon’s list, the average purchase price of £573,116 is skewed by the presence of large, period properties in affluent Bourneville, the model village that was founded by the Quaker Cadbury family for employees at its Cadbury’s chocolate factory.

The third-most popular BTL hotspot was DH1 in Durham, where properties can deliver yields of up to 7.3%. Continuing the theme of thriving student markets, the University of Durham’s Palatine Centre is located in Framwellgate Moor, contributing to the postcode’s popularity among students.

The analysis also found that terraced houses were the most popular investment property type in all of the top locations, except for CW2 in Crewe, where multi-unit freehold blocks (MUFBs) of flats were preferred by landlords.

Richard Rowntree, managing director at Paragon Bank, said: “Our data shows that portfolio landlords have a strategy of targeting major towns and cities across England and Wales, from Brighton and Hove on the South coast, up through the Midlands and Wales and on to Newcastle. Something that links many of these diverse areas is their proximity to universities or large employers, such as the NHS or manufacturing and distribution hubs. This helps to illustrate the crucial role that the private rental sector plays in supporting further education provision and the workforce, both vital facets of the UK economy.”

 

Postcode Avg property value (£) Weighted rental yield
M14 – Manchester 367,461 7.5%
B29 – Birmingham 573,116 6.9%
DH1 – Durham 401,891 7.3%
NG7 – Nottingham 343,700 7.7%
CF24 – Cardiff 406,620 7.6%
NE2 – Newcastle-upon-Tyne 524,208 6.5%
ST4 – Stoke-on-Trent 130,990 9.1%
LE11 – Leicester 275,561 7.4%
CW2 – Crewe 154,961 8.7%
BN2 – Brighton & Hove 489,662 6.3%

 

If you are interested in learning more about the BTL sector, then register for The Buy to Let Forum, which takes place between 24 April and 2 May in Bolton, Birmingham, Cardiff and Reading.

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