The latest LendInvest buy to let report, which ranks 105 postcode areas around England and Wales based on a combination of four critera, has been released.

The criteria are capital value growth, transaction volumes, rental yield and rental price growth.

The key findings from this quarter’s report are that Luton is again the location with the highest returns; Birmingham gives slightly higher returns than more fashionable Manchester; and that regional capitals Cambridge and Bristol are now amongst the top 10 locations. 

“It’d be so easy to look at the underlying data that tells us transaction volumes are down and make dire predictions about the health and wealth of the rental market. Instead, what our index proves once again is that looking at one metric in the housing market is never enough. One metric on its own can’t clearly define the performance of a city’s property market” claims Ian Boden, sales director at LendInvest. 

“Each of the top performing buy to let locations this quarter is experiencing a slowdown in transactions – substantial falls in places, dips in others. But, the best places this quarter continue to outperform the competition well thanks to strong performances on other, equally important metrics like rental yield, capital gains and rental price growth” he adds.

“Data from the buy to let index, UK Finance and our own experience as a mortgage lender strongly suggests that right now a ‘buy, hold and remortgage’ strategy is some investors’ preference while the market works through a possible slowdown.”

The top 10 buy to let postcodes are: 

1. Luton 

Yield 3.91%

Capital Gains 7.29%

Rental Price Growth 3.7%

Transaction Volume Change -6.15%

2. Colchester 

Yield 3.63%

Capital Gains 6.33%

Rental Price Growth 4.77%

Transaction Volume Change -6.73%

3. Romford 

Yield 4.09%

Capital Gains 4.99%

Rental Price Growth 5.28%

Transaction Volume Change -7.84%

4. Birmingham 

Yield 4.55%

Capital Gains 5.00%

Rental Price Growth 3.66%

Transaction Volume Change -6.46%

5. Manchester

Yield 5.36%

Capital Gains 4.38%

Rental Price Growth 3.71%

Transaction Volume Change -7.35%

6. Cambridge 

Yield 3.26%

Capital Gains 4.57%

Rental Price Growth 4.76%

Transaction Volume Change -6.63%

7. Northampton

Yield 3.99%

Capital Gains 6.59%

Rental Price Growth 2.17%

Transaction Volume Change -7.36%

8. Bristol

Yield 3.83%

Capital Gains 5.51%

Rental Price Growth 2.75%

Transaction Volume Change -6.2%

9. Ipswich

Yield 3.42%

Capital Gains 5.77%

Rental Price Growth 2.76%

Transaction Volume Change -6.16%

10. Southend-on-Sea

Yield 3.62%

Capital Gains 6.05%

Rental Price Growth 2.53%

Transaction Volume Change -6.93%