Paragon Bank has used its own lending data to establish the top 10 locations that attracted the most buy-to-let investment in 2024.

The lender revealed that postcodes serving students and large employment markets headed the list.

CF24 in Cardiff was the postcode most favoured by buy-to-let landlord customers last year, according to Paragon.

The postcode includes Cathays and Roath, which are amongst the most popular areas for the annual influx of students who relocate to the Welsh capital to study at one of its three universities.

Landlords investing in the area can achieve average rental yields of 8.7%.

The second most popular location amongst buy-to-let landlords was B29 in Birmingham. Alongside the largely affluent areas of Bourneville and Edgbaston, the postcode covers the Selly Oak district.

The University of Birmingham and the Queen Elizabeth Hospital can both be found in Selly Oak. With the university ranked amongst the world’s top 100 and the hospital one of the UK’s largest single-site healthcare facilities, investors can cater to sizeable student and public sector staff markets.

Rental yields of 7.5% can typically be generated in the area.

PL4 in Plymouth came in third on Paragon’s top 10 buy-to-let hotspots list and shares similarities with its fellow podium place cities.

Buy-to-let homes in PL4 can deliver rental yields of 9.6%, the second highest amongst hotspot locations.

Other locations on the list include LS6 in Leeds, NG7 and NG3 in Nottingham, M14 in Manchester and GL1 in Gloucester, as well as post codes in Liverpool and Stoke.

With the exception of Nottingham’s NG3, where converted flats were most commonly purchased by buy-to-let landlords throughout 2024, the analysis found that terraced houses were the preferred property type for investors in all of the top locations.

Neil Smith, head of surveyors at Paragon Bank, said: “Looking at last year’s most popular postcodes amongst Paragon’s buy-to-let landlords highlights geographical concentrations of investment.

“Even though privately rented homes are in short supply all over the UK, landlords are strategic and often target locations with consistently high demand; cities where we see large transient populations, such as students and temporary workers, alongside more permanent residents like young professionals and families.

“There is also a notable propensity amongst buy-to-let landlords to invest in property types that can deliver strong yields, often terraced houses and HMOs.

“While serving distinct markets has advantages, it is wise to consider if a particular location could also appeal to other tenant cohorts to help investments remain profitable if there is a downturn in the primary market. The main takeaway here is to thoroughly research potential locations before jumping in with both feet.”