Thursday, July 7, 2022

Luton is the top buy to let hotspot in England

Luton has re-emerged as the top buy to let hotspot in England for third time since end of 2016

While cities in the Midlands still offer good investment opportunities for landlords in England and Wales, Luton has re-emerged as the top buy to let hotspot.

It tops the latest quarterly buy to let index from LendInvest which ranks 105 post code areas based on capital value growth, sales volumes, yields and rental price growth.

Luton has now occupied the top of the index for a third time since December 2016 with yields of 3.91%, capital gain of 7.29% and rental growth of 3.7%. In second place is Colchester at 3.63%, 6.33% and 4.77% with Romford in third place at 4.09%, 4.99% and 5.28%.

Birmingham and Manchester in fourth and fifth place still present good investment opportunities for landlords, according to the index report, and Cambridge and Bristol are in the top 10 for the first time in sixth and eighth place.

The worse location for buy to let is currently East Central London with a yield of 2.86%, capital gain a negative 13.86% and rental growth down 0.2%, followed by Durham, Cleveland, Crewe, South West London, Sunderland, West Central London, Twickenham, Blackburn and Lancaster making up the 10 worst performing areas for landlords.

But sales volumes are down considerably, some 6.77% nationally, and the index report points out that this is just one measure that needs to be taken into account when making investment decisions.

Sales Director at LendInvest Ian Boden said it’d be so easy to look at the underlying data that tells transaction volumes are down and make dire predictions about the health and wealth of the rental market. Instead, what the 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.

Each of the very 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 said that data from the buy to let index, UK Finance and their 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.


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