"From Cardiff and Nottingham to Manchester and Leeds, these hotspots highlight how investor strategy has become more focused and data-driven"
- Louisa Sedgwick - Paragon Bank
Landlords continued to focus on university locations when investing in buy-to-let hotspots during 2025, according to new lending data from Paragon Bank.
Analysis of mortgage completions between 1 January and 31 December 2025 shows that postcodes surrounding major universities dominated landlord purchases. These areas combine strong student demand, established rental markets and high rental yields, with many locations delivering returns above 9%.
Cardiff’s CF24, Nottingham’s NG7 and Manchester’s M14 ranked as the three most active buy-to-let hotspots for the year. Loughborough’s LE11 and Gloucester’s GL1 completed the top five.
Top buy-to-let hotspots for landlord purchases
Paragon’s data shows a clear geographical pattern. Landlords frequently target areas where large student populations create predictable rental demand and strong occupancy levels.
The top 10 buy-to-let hotspots for 2025 were:
CF24 – Cardiff (9.06%)
Cardiff’s prime student district, fuelled by Cardiff University and Cardiff Metropolitan, is coupled with young professionals. High-density rental streets and consistent year-round demand deliver the strongest yields in the top 10.
NG7 – Nottingham (8.94%)
Home to the University of Nottingham and Nottingham Trent, NG7 combines high occupancy, strong turnover and a mix of terraced stock tailored to student living. Over half of the residents are full-time students.
M14 – Manchester (8.28%)
One of the UK’s largest student hubs covering Fallowfield and Rusholme. Strong demand from University of Manchester students supports consistently high performance for HMOs and terraced rentals.
LE11 – Loughborough (7.83%)
A well-established student market driven by Loughborough University, offering landlords low entry prices and dependable multi-let demand.
GL1 – Gloucester (9.66%)
One of the highest-yielding areas in the ranking. A varied tenant mix, including students and young professionals, helps support year-round rental demand. Gloucestershire Royal Hospital and Gloucester Quays also sit within the postcode.
CR0 – Croydon (5.93%)
Unlike the university-led hotspots, Croydon benefits from commuter demand, regeneration and proximity to London. Converted flats remain particularly attractive to landlords, although yields are lower due to higher purchase prices.
B29 – Birmingham (7.72%)
Selly Oak is a core student location serving the University of Birmingham. Predictable academic cycles underpin strong rental demand, with additional demand from staff at the Queen Elizabeth hospital.
HU5 – Hull (9.01%)
Hull’s university district continues to deliver some of the UK’s strongest returns, supported by low property prices and a stable tenant base.
LS6 – Leeds (8.96%)
Headingley and Hyde Park form one of the UK’s most established student rental markets, delivering consistently high occupancy rates.
PL4 – Plymouth (9.78%)
The highest-yielding location in the ranking. Affordable purchase prices combine with strong tenant demand driven by students, central neighbourhoods and nearby Mount Gould Hospital.
Property types landlords are buying
Paragon’s lending data also highlights the types of homes landlords are acquiring across these buy-to-let hotspots.
Terraced housing remains the most common purchase type, reflecting demand for properties that can accommodate students, sharers and young professionals.
For landlords, these homes often offer:
Lower purchase prices compared with detached or semi-detached homes
Flexible layouts suited to HMOs or multi-let accommodation
Strong rental demand in dense urban areas near universities.
This combination helps support the higher rental yields seen across many of the top-performing postcodes.
Why student markets remain attractive
The findings suggest that landlords are prioritising areas where rental demand is highly predictable.
University cities often provide a reliable flow of tenants each academic year, while nearby employment centres, hospitals and local amenities help maintain demand outside student cycles.
“These hotspots highlight how investor strategy has become more focused and data-driven,” said Louisa Sedgwick, managing director of mortgages at Paragon Bank. “This year’s rankings show a clear and enduring trend; the strongest buy-to-let markets are those supported by large student populations and a solid flow of young renters, supplemented by other sources of tenant demand, such as hospitals or employment centres. Landlords are increasingly targeting locations where tenant demand is predictable and yields remain consistently high.
“From Cardiff and Nottingham to Manchester and Leeds, these hotspots highlight how investor strategy has become more focused and data-driven. Rather than being deterred by the wider economic environment, landlords are choosing resilient, high-performing rental markets that continue to deliver strong returns.”
What this means for landlords
For landlords and property investors, the data points to several ongoing trends in the UK property market:
Student locations remain core buy-to-let hotspots, supported by consistent tenant turnover
Rental yields above 8% remain achievable in several regional markets
Lower purchase prices outside London continue to attract investor activity
Local employment centres and hospitals help stabilise demand beyond student tenancies.
As mortgage affordability and regulation continue to shape landlord behaviour, investors appear to be concentrating activity in proven rental markets rather than expanding into less established locations.
If this trend continues, university cities and regional rental hubs are likely to remain central to buy-to-let investment strategies across the UK property market.
