The towns and cities more experienced landlords are choosing to buy and then let can offer an indication of the places with the best yields.
To help you out, mortgage lender Paragon has dug deep into its files to find the most popular locations amongst portfolio landlords.
Portfolio landlords are those with four or more properties – so these are people who are well established in buy-to-let.
Paragon revealed Manchester’s M14 postcode was the most popular location for buy-to-let landlords to invest in during 2023, according to its lending data.
This area covers Manchester’s Fallowfield, Rusholme, Old Moat and Ladybarn districts. It is located between the University of Manchester and Manchester Metropolitan University, said Paragon, so landlords were clearly attracted to the area by the high student population.
Those investing in the area can achieve rental yields of up to 7.5%.
Next was the B29 postcode area which includes the Selly Oak, Bournville, Edgbaston, Kings Heath, Northfield and Stirchley districts of Birmingham.
Once again, this area is home to a sizable student population, especially in Selly Oak, the location of Birmingham University.
Meanwhile, in neighbouring Edgbaston is the Queen Elizabeth Hospital, which is a notable local employer as one of the UK’s largest single-site hospitals.
Paragon said, although properties in the sought-after Birmingham postcode were the most expensive on the list, the average purchase price of £573,116 was 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.
Across the postcode yields of up to 6.9% can be generated.
The third most popular buy-to-let hotspot was DH1 in Durham where properties can deliver yields of up to 7.3%, Paragon revealed.
This also has a thriving student market as the University of Durham’s Palatine Centre is located in Framwellgate Moor, contributing to the postcode’s popularity amongst students.
Top 10 buy-to-let investment locations (Source: Paragon Bank)
| 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, 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 onto 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 PRS plays in supporting further education provision and the workforce, both vital facets of the UK economy.”
When it came types of property, Paragon found 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 of flats were preferred by landlords.
