Paragon Bank’s lending data covering the 12 months to the end of June has revealed where investors are buying – and where they’re not. 

It appears that Cardiff’s CF24 postcode attracted the highest level of buy-to-let investment during the period, climbing from fifth place last year to top the lender’s latest buy-to-let hotspot list.

With over four in 10 properties, 42%, in the area are privately rented and average yields of 8.9%, it is unsurprising to see CF24 top the list, which is based on the number of buy-to-let mortgages granted in the period. 

Further analysis suggests that landlords are investing in the area to cater to the large numbers of NHS staff and strong student market. The University Hospital of Wales and St David’s Hospital are close to CF24 and Cardiff Royal Infirmary is within it. Over a quarter, 27%, of CF24’s residents are recorded as students, with Cardiff University, Cardiff Metropolitan University and the University of South Wales all within easy reach.

A new entrant into the list, PL4 in Plymouth is the area that saw the second highest levels of investment by buy-to-let landlords during the period.

Like Cardiff, Plymouth has three universities – Arts University Plymouth, Plymouth Marjon University and the University of Plymouth – providing landlords with a reliable stream of term-time tenants, in addition to key workers employed at the Mount Gould Hospital located in PL4.

Rental yields are another aspect likely drawing landlords to PL4. Here, landlords can generate annual average returns of 10.2%, the highest of all hotspots on the list, with ONS data revealing that PL4’s average property price of £216,000 is substantially lower than the England average of £286,000.

Taking the third podium place is LE11 in Loughborough, last year’s eighth most popular postcode for landlord purchases, achieving average annual rental yields of 8.0% during the period. Sharing similarities with many of the other hotspot locations, a key driver of demand is provided by students and large local workforces, with LE11 home to the highly rated Loughborough University, the town’s largest employer, and Loughborough Hospital.

NG7 in Nottingham retained its place as the fourth most popular buy-to-let investment postcode. Other postcodes that also featured amongst Paragon’s top investment locations for a second-year running are Stoke-on-Trent’s ST4, Birmingham’s B29 and M14 in Manchester which fell from the top spot in 2024 to eighth this time around. 

Louisa Sedgwick, managing director at Paragon Bank, says:“Looking at our lending data covering the 12 months to the end of June, we can see similarities in landlord investment strategies. Our data also shows that landlords typically purchase properties in larger town or cities and within relatively close proximity to universities or large local employers, benefitting from strong and stable demand. This support of higher education and healthcare, in addition to important sectors such as software, manufacturing and logistics, highlights the often-overlooked contribution of the PRS to the UK economy.”

She added: “Terraced houses were the property type most often bought by landlords in each of the hotspot locations. Smaller terraces are often more affordable than other property types, making them a good place to start for newer landlords or those looking to expand their portfolios. At the other end of the scale, HMOs are often classified as terraced properties but benefit from typically higher yields owing to the capacity for multiple tenancies.”