Postcodes with strong student populations and robust rental demand accounted for the most active buy-to-let investment locations in Paragon Bank’s 2025 lending data.

Paragon Bank has identified Cardiff (pictured), Nottingham and Manchester as the UK’s leading buy-to-let postcode hotspots for 2025, with university areas continuing to attract the highest levels of landlord activity.

The rankings, based on completions recorded between 1 January and 31 December 2025, suggest landlords remained focused on markets where demand is underpinned by large student populations, established rental sectors and relatively strong yields.

Cardiff’s CF24 topped the list, followed by Nottingham’s NG7 and Manchester’s M14. Loughborough’s LE11 and Gloucester’s GL1 completed the top five, pointing to continued investor interest in regional university cities and towns where rental demand has remained dependable.

Paragon said the results showed a consistent pattern in landlord purchasing behaviour, with terraced homes the most common property type across the leading postcodes. That, it said, reflects demand for stock suited to students, sharers and young professionals.

YIELDS REMAIN A MAJOR DRIVER

While Cardiff led the overall hotspot table, Plymouth’s PL4 recorded the highest yield at 9.78%. Gloucester’s GL1 followed at 9.66%, with Hull’s HU5 at 9.01%.

Seven of the top 10 postcodes generated yields above 8%, underlining the extent to which returns continue to shape landlord acquisition strategies, particularly in lower-value regional markets.

CF24 in Cardiff, which Paragon described as the city’s prime student district, delivered a yield of 9.06%. NG7 in Nottingham returned 8.94%, while Manchester’s M14 posted 8.28%.

Further down the list, LE11 in Loughborough recorded 7.83%, while GL1 stood out for combining one of the strongest yields in the ranking with a broader tenant mix that extends beyond students to include young professionals.

Croydon’s CR0 was the only postcode in the top 10 not primarily associated with a university market. Paragon said its appeal stemmed from commuter demand, regeneration and links to London, although at 5.93% it generated one of the lower yields in the table because of higher purchase prices.

Elsewhere, Birmingham’s B29, Hull’s HU5, Leeds’ LS6 and Plymouth’s PL4 all featured as established student lettings markets where relatively low entry values and consistent tenant turnover continue to support investor demand.

LANDLORDS TARGETING RESILIENT RENTAL AREAS

The figures suggest landlords are continuing to prioritise areas where occupancy patterns are easier to forecast and where rental demand is reinforced by major local institutions such as universities and hospitals.

That was particularly evident in Gloucester and Plymouth, where Paragon said demand was supported not only by students but also by employment centres including hospitals. In Birmingham, B29’s position was linked to both the University of Birmingham and the Queen Elizabeth hospital.

Louisa Sedgwick, managing director of mortgages at Paragon Bank, said: “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.”

She added: “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.”

The data is likely to reinforce the view that, despite wider economic pressures, landlords remain willing to invest where local market fundamentals are strong. For brokers and lenders, the concentration of activity in student-led postcodes may also point to where demand for specialist finance is likely to remain most active.