Top buy-to-let hotspots in the UK as lending surges by almost 40%

Becoming a buy-to-let landlord has grown increasingly difficult in recent years as rental yield growth has slowed while house prices have increased.

The average price of a house in the UK in June was £296,665, according to Halifax’s house price index, an increase of around 2.5% compared to last year.

While this may be good news for homeowners, it does mean that the cost of becoming a buy-to-let landlord has increased. Stamp duty hikes, which came in in April, have not helped matters either.

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However, there are still some places in the country where buy-to-lets are still very much in vogue.

We look at the top ten places in the UK where the most buy-to-let mortgages have been completed in the 12 months to July 2025 and how high rental yields are in these areas.

Where is the top place in the UK for buy-to-lets?

The top place in the UK for buy-to-let is the CF24 postcode in Cardiff, according to new research by Paragon Bank.

Here, more than four in ten (42%) of all properties are privately rented, netting landlords a weighted rental yield of 8.9%, well above the average of 6.9% in the rest of Wales.

Landlords are investing in this area in order to cater to the housing demand of large numbers of NHS staff, as well as a strong student market, the analysis found.

The CF24 postcode is close to both the University Hospital of Wales and St David’s Hospital, making it a useful place for NHS workers to live.

Meanwhile, 27% of the postcode’s residents are recorded as students, with Cardiff University, Cardiff Metropolitan University and the University of South Wales all close by.

The second-biggest buy-to-let hotspot in the UK is the PL4 postcode in Plymouth, which has the highest rental yields of the top ten hotspots, at 10.2%.

The average property price in PL4 is £216,000, ONS data shows, which is substantially lower than the England average of £286,000.

The postcode is in no short supply of tenants as, like Cardiff, significant housing demand is derived from the three universities in the city – Arts University Plymouth, Plymouth Marjon University and the University of Plymouth.

The UK’s third buy-to-let hotspot is the LE11 postcode in Loughborough, where landlords are able to achieve average rental yields of 8% – lower than in Plymouth, but still higher than the UK average.

Housing demand in this postcode is largely derived from students from Loughborough University and NHS workers from Loughborough Hospital, the town’s largest employer.

A table showing the top ten buy-to-let postcodes can be found below.

Source: Paragon Bank

Louisa Sedgwick, managing director of mortgages at Paragon Bank, said the data shows landlords “typically purchase properties in larger towns or cities and within relatively close proximity to universities or large local employers, benefitting from strong and stable demand.”

She adds that the demand derived from these employers “highlights the often-overlooked contribution of the private rented sector to the UK economy”.

The analysis found that terraced houses are by far the most common type of property for buy-to-let landlords.

Sedgwick says this is likely because smaller terraced houses are often more affordable than other types of property, so this “makes them a good place to start for newer landlords or those looking to expand their portfolios.”

She adds that Houses in Multiple Occupancy (HMO) are often classified as terraced homes, but can be more of a boon for landlords as the capacity for multiple tenancies typically means landlords can benefit from higher yields.

Buy-to-let lending is rebounding

Buying-to-let has been difficult in recent years, as rental yields fell while house prices rose, making being a landlord less and less attractive.

However, the tide could be shifting. The buy-to-let market had a significant bounce-back in the first quarter of 2025, new data from UK Finance found.

There were 58,347 new buy-to-let loans advanced in the UK during the first three months of the year, worth £10.5 billion.

This represented a 38.6% increase in the number of landlord loans advanced when compared to the same quarter in 2024, while the combined value of these loans increased 46.8% in the same time period.

The number of new buy-to-let loans is not the only thing that has seen an increase in the last 12 months – rental yields have also increased from 6.88% in Q1 2024 to 6.94% in Q1 2025, suggesting buy-to-lets are becoming more profitable.

However, this data covers the three months before the hikes to stamp duty in April, so could reflect the rush buyers felt as they raced to get their purchase approved before costs increased.

Lousia Sedgwick, managing director of mortgages at Paragon Bank, said buy-to-let lending in the first quarter of 2025 was in line with pre-pandemic levels and was the highest seen since the mini-Budget.

She said it was “primarily driven by a surge in new purchase activity ahead of the changes to stamp duty thresholds at the end of the quarter.”

“This shows that with the right market conditions landlords will invest. Demand currently exceeds supply and is forecast to continue, driven by factors such as population increases and household formation changes,” she added.