Paragon Bank’s examination of its lending records has provided insights into the preferences of portfolio buy-to-let landlords, individuals who own four or more properties for investment purposes. Among the various locations considered, Manchester’s M14 postcode emerged as the most popular choice for buy-to-let investments, according to Paragon’s lending data for the year 2023. This finding sheds light on the regional preferences and investment strategies of experienced landlords operating in the buy-to-let market.
The analysis underscores the significance of location selection in the buy-to-let sector, highlighting Manchester’s M14 postcode as a hotspot for investment activity among portfolio landlords. By identifying such key areas of interest, landlords can make informed decisions regarding their property investments, maximizing potential returns and optimizing their property portfolios for long-term growth and profitability.
Manchester’s Fallowfield, Rusholme, Old Moat, and Ladybarn districts are strategically situated between the University of Manchester and Manchester Metropolitan University, making them prime locations for landlords. These areas boast a vibrant student population, attracting investors seeking lucrative buy-to-let opportunities. With rental yields soaring as high as 7.5%, landlords find the area particularly enticing for its potential returns on investment.
In Birmingham, the B29 postcode covers a diverse range of neighborhoods, including Selly Oak, Bournville, Edgbaston, Kings Heath, Northfield, and Stirchley. Among these, Selly Oak stands out as a hub for students attending Birmingham University, contributing to the area’s appeal for buy-to-let investors. Despite the higher property prices, which average £573,116 due to the presence of stately period homes in affluent Bournville, landlords can still enjoy yields of up to 6.9% across the postcode.
Selly Oak’s popularity among students bolsters its position as a hot spot for buy-to-let opportunities, with its proximity to Birmingham University driving demand for rental properties. Meanwhile, in Manchester, the bustling student communities in Fallowfield, Rusholme, Old Moat, and Ladybarn continue to attract investors keen on capitalizing on the city’s thriving rental market. With rental yields remaining strong, these areas remain appealing prospects for landlords looking to expand their property portfolios.
DH1 in Durham emerged as the third most sought-after buy-to-let location, offering potential yields of up to 7.3%. The area’s appeal is largely attributed to its proximity to the University of Durham’s Palatine Centre, situated in Framwellgate Moor, which attracts a significant student population, bolstering rental demand.
| Postcode | Avg Property Value £ | Weighted rental yield | Most common type of property |
| M14 – Manchester | 367,461 | 7.50% | Terraced House |
| B29 – Birmingham | 573,116 | 6.90% | Terraced House |
| DH1 – Durham | 401,891 | 7.30% | Terraced House |
| NG7 – Nottingham | 343,700 | 7.70% | Terraced House |
| CF24 – Cardiff | 406,620 | 7.60% | Terraced House |
| NE2 – Newcastle-upon-Tyne | 524,208 | 6.50% | Terraced House |
| ST4 – Stoke-on-Trent | 130,990 | 9.10% | Terraced House |
| LE11 – Leicester | 275,561 | 7.40% | Terraced House |
| CW2 – Crewe | 154,961 | 8.70% | Freehold Block |
| BN2 – Brighton & Hove | 489,662 | 6.30% | Terraced House |
Richard Rowntree, Managing Director at Paragon Bank, comments, “Our data highlights the strategic approach of portfolio landlords, targeting key towns and cities across England and Wales, spanning from Brighton and Hove in the south to Newcastle in the north. Many of these areas share a common feature of being near universities or major employers like the NHS and manufacturing hubs. This underscores the pivotal role of the private rented sector (PRS) in supporting education and workforce development, critical pillars of the UK economy.”
Additionally, the analysis reveals that terraced houses are the favored investment property type in most top locations, except for CW2 in Crewe, where landlords show a preference for multi-unit freehold blocks of flats.
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