According to the latest Buy-to-Let Index from online mortgage lender LendInvest, Luton has managed to hold on to the top spot as the best place for buy-to-let investment.
The North continues to show strong signs of growth in the buy-to-let market, with Manchester breaking into the top three.
Luton has seen a 4.51% increase in rental price growth and an average yield of 4.51%.
The buy-to-let market in Luton is supported by its status as a university town with the student rental market often offering attractive yields.
The LendInvest BTL Index ranks each postcode area around England and Wales based on a capital value growth, transaction volumes, rental yield and rental price growth.
Colchester has climbed the table to take second place, eclipsing near-neighbour Rochester which has seen a fall in both rental yield and capital gains.
Manchester moves into the top three on strength of rental yields and capital gains,
The city’s residential property market boasts the most lucrative average yields thanks in no small part to a thriving rental market.
Meanwhile, Hull jumped 28 places to take fifth spot, signalling further upward mobility in Northern markets.
Ian Boden, sales director at LendInvest, said: “This quarter’s data supports the strong market sentiment that the impact of price sensitivity in London and the South East isn’t being felt to the same degree elsewhere around the country. Cities such as Hull and Nottingham making significant gains in the index (up #33 to #5 and #35 to #12 respectively) is encouraging, and points to competitive market conditions in those areas and higher than average levels of activity.
“Maintaining a balance between the types of tenure in our housing system is more important than ever. We would expect to increasingly see professional buy-to-let investors become cross-country landlords, and diversify their portfolios by looking beyond their local areas to find the best investment opportunities elsewhere around the UK and entering alternative asset classes.”
The top 10 buy-to-let postcodes
| Yield | Capital gains | Rental price growth | Transaction volume growth | |
| Luton | 4.51% | 10.29% | 6.81% | -5.00% |
| Colchester | 4.22% | 13.02% | 3.34% | -5.05% |
| Manchester | 6.04% | 6.04% | 7.39% | 6.20% |
| Rochester | 4.45% | 8.41% | 5.36% | -5.32% |
| Hull | 4.65% | 11.12% | 2.53% | -6.24% |
| Stevenage | 3.96% | 9.54% | 4.84% | -7.14% |
| Romford | 4.78% | 11.99% | 1.01% | 5.98% |
| Southend-on-Sea | 4.19% | 10.50% | 2.10% | 6.44% |
| Ipswich | 3.98% | 10.04% | 2.33% | -5.81% |
| Ilford | 4.19% | 12.65% | 1.15% | -4.86% |
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