Ranked: Britain’s top ten buy-to-let hotspots

Lendinvest index compares yield, capital gains, rental price growth and transaction volumes to assess performance

Romford in East London has emerged as the best place for buy-to-let returns, usurping Luton after delivering an 8% jump in rental price growth, according to workings by LendInvest.

The firm’s latest quarterly BtL index indicates that the South East is the place to invest, with Northampton coming in as the only Top Ten postcode outside of this region. Rankings are based on yield, capital gains, rental price growth and transaction volumes, with data sourced from the Land Registry and Zoopla.

Stevenage, incidentally, was ranked tenth overall despite recording the highest rental price growth at 10.20%

The Top 10 buy-to-let postcodes

 

Rental yield

Capital gains

Rental price growth

Transaction volume growth

Romford

5.24%

16.55%

8.33%

-7.84%

Luton

4.73%

15.19%

7.94%

-6.06%

Dartford

4.74%

17.75%

6.25%

-12.44%

Rochester

4.71%

13.96%

6.94%

-7.09%

Watford

4.24%

17.17%

6.36%

-15.78%

Enfield

4.60%

16.97%

4.53%

-11.97%

Southend-on-Sea

4.50%

14.41%

5.95%

-9.40%

Northampton

4.77%

8.11%

8.33%

0.85%

Colchester

4.44%

12.21%

4.38%

-2.61%

Stevenage

4.06%

9.39%

10.20%

-11.00%

The Bottom 10 buy-to-let postcodes

Rental yield

Capital gains

Rental price growth

Transaction volume growth

Galashiels

3.80%

-9.57%

0.91%

1.00%

Cleveland

4.66%

1.24%

-3.51%

-11.26%

North West London

3.82%

5.40%

-5.03%

-13.01%

Carlisle

4.16%

0.61%

0.00%

-14.23%

Western Central London

3.46%

1.50%

4.44%

-27.90%

Llandrindod Wells

3.49%

-1.20%

-1.24%

0.57%

Hull

4.64%

5.61%

-3.51%

-11.39%

Newcastle upon Tyne

4.74%

1.53%

0.00%

-9.30%

Llandudno

4.73%

0.77%

0.00%

-4.99%

Swansea

4.67%

1.24%

0.00%

-5.76%

  • First place: Romford – Romford has replaced Luton at the top of the index climbing six places to do so. Prices obtained in Romford’s rental market have picked up in recent months, resulting in greater rental price growth over the past 12 months to support strong capital gains in the region. The increases in rental prices have also maintained an attractive yield for potential investors.
  • Second place: Luton – Despite losing top spot, Luton remains a highly desirable market with capital gains showing no signs of slowing down. Continued growth in the rental market has tempered the compression of yields, proving Luton to be a resilient staple in the buy-to-let index.
  • Third place: Dartford – A close third, and another climber in the index is Dartford. The Dartford market has seen the greatest level of capital gains of all markets in the last 12 months, with prices picking up in what is becoming an increasingly competitive market. Dartford also bene tted from strong rental growth over the year.
  • New entrants: Several new markets have entered the top 10 in this edition of LendInvest’s Buy-to-let index. Up eight places to fourth is the Rochester market. Rochester is a rare case in which the rate of growth in rental prices has outstripped that of capital gains despite very strong growth in this metric. Up six places is Watford, second only to Dartford in capital gains over the previous 12 months. Colchester is another market breaking into the top ten, up nine places.
  • Markets to watch: Along with Rochester, there are several other markets with yields drifting slightly despite very strong capital gains. Bromley and Tunbridge Wells are both areas that boast strong growth in both the capital gains and rental prices over the last year. The outward movement in yields coupled with strong performance across all metrics could well attract strong investment into these markets.

Christian Faes, Co-Founder and CEO of LendInvest: “Consistency is clear here: suburban parts of the South East of England continue to offer the best opportunities for investors, while Inner London continues to underperform. The absence of a large shake-up in the Top 10 buy-to-let postcodes this quarter shows some stability in the market following a year of market-moving uncertainty and geopolitical shocks. This can only be good news for property professionals: there is nothing to wait for to start investing, renovating and building.

“Landlords and investors must remember that considering rental yield isn’t enough; it’s critical to find a property that impresses across all metrics. In the quarter ahead, we’ll be watching closely a number of areas that could edge towards the Top 10, like Bristol (ranked #15), Milton Keynes (#16) and Manchester (#21).”

lendinvest.com