Buy-to-let landlords have been piling into UK cities with strong student demand and NHS infrastructure, with Cardiff’s CF24 postcode topping Paragon Bank’s latest investment rankings for the year to June 2025. Affordable terraced housing and sky-high rental yields continue to shape where landlords deploy capital—often close to universities, hospitals, and large employers.
Terraced homes dominate where student and NHS demand is strong
Paragon Bank’s lending data revealed that Cardiff’s CF24 is now the most sought-after postcode for buy-to-let investors, climbing from fifth place last year. With an average rental yield of 8.9% and a staggering 42% of local homes privately rented, landlords are clearly capitalising on consistent tenant demand in Wales’s capital.
According to Paragon, the driving force behind this demand is a blend of NHS staff and students—27% of CF24’s residents are students, thanks to nearby Cardiff University, Cardiff Met and the University of South Wales. The University Hospital of Wales and St David’s Hospital are also key local employers, offering landlords a steady tenant pool all year round.
Louisa Sedgwick, Managing Director at Paragon Bank, noted: “Our data shows landlords are targeting cities with strong student populations and healthcare infrastructure. These locations offer stable demand—an increasingly important factor in today’s regulatory and mortgage landscape.”
Plymouth and loughborough join the buy-to-let leaderboard
Plymouth’s PL4 postcode made its debut in second place, offering the highest yields of all hotspots at 10.2%, with average property prices sitting at just £216,000—far below England’s average of £286,000. The presence of three universities and Mount Gould Hospital ensures reliable rental demand, with smaller terraced properties proving particularly popular among landlords.
Not far behind, LE11 in Loughborough secured third place, with yields of 8.0%. Landlord purchases there are largely supported by Loughborough University, which remains the town’s largest employer, and the nearby hospital. The local combination of affordable housing and dependable tenants continues to appeal to landlords seeking lower-risk returns.
Interestingly, the top 10 list was dominated by terraced homes, the property type most commonly purchased in every hotspot. Sedgwick added: “Terraced properties are typically more affordable, making them ideal for portfolio starters or those looking to expand. Many HMOs fall into this category too, bringing higher returns through multiple tenancies.”
Familiar cities hold firm, but rankings shuffle
Some cities have held steady year-on-year, despite slipping slightly in ranking. Manchester’s M14 postcode, which topped the list in 2024, fell to eighth but still posted solid yields of 8.1%. Nottingham’s NG7 stayed put in fourth, while Stoke-on-Trent’s ST4 remained in the top 10, offering yields over 10%.
Other cities featured include Hull (HU5), Leeds (LS6), Birmingham (B29) and Gloucester (GL1)—all continuing to offer strong fundamentals for investors, from large student populations to steady employment hubs. Notably, the common thread remains the same: these are locations where the private rented sector supports local economies, from education to logistics.
Alex Morgan, a Nottingham-based landlord with five properties in NG7, said: “I’ve kept my focus on terraced homes near the universities. The yields are consistent, and there’s never a shortage of tenants—though rising maintenance costs and licensing schemes are definitely eating into margins lately.”
Long-term demand in cities could outpace government supply efforts
While government rhetoric often focuses on homeownership and restrictions on landlords, the latest data underlines the continued demand for rental housing in regional hubs—particularly those with universities and key public services. Landlords are responding pragmatically to where long-term demand lies, even as regulation and finance costs grow more complex.
As the PRS continues to fill a housing gap left by sluggish public sector delivery, landlords will likely keep doubling down on affordable cities where demand never quite dips. The question now: how long can private landlords carry the weight of student and NHS housing without meaningful policy support?
