The Intermediary – September 2025 - Flipbook - Page 36
BUY-TO-LET
In focus
Landlords are
supporting the
UK’s key sectors
C
ontrary to common
stereotypes, today’s
landlords are not
passive rent collectors.
Instead, they’re
active investors who
strategically shape their portfolios
to meet local housing needs while
supporting economic growth.
The most seasoned landlords draw
on their experience, and newer
entrants to the market can become
shrewd investors by utilising the
wealth of education and advice
available via brokers, lenders and
industry commentators.
This knowledge means that
they purchase with purpose, oen
focusing on locations that provide
a combination of a need for flexible
housing, affordable property,
and long-term rental income and
capital appreciation potential. That
brief is oen met in postcodes near
universities, hospitals and major
employers – places where consistent
demand underpins stable returns.
Popular postcodes
Cardiff ’s CF24 postcode, which topped
our latest buy-to-let (BTL) hotspot list,
offers a prime example. With 42% of
properties privately rented and yields
approaching 9%, the area is a magnet
for investors.
Perhaps even more telling is
the tenant profile, with around a
quarter (27%) of residents being
students, and nearby hospitals
including the University Hospital of
Wales and Cardiff Royal Infirmary
making it home to a significant key
worker population. Landlords in
the Welsh capital aren’t just chasing
yields; they’re enabling healthcare
professionals and students to access
quality, affordable housing near to
their places of study and work.
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The Intermediary | September 2025
This strategic focus is mirrored
in Plymouth’s PL4 postcode. Home
to three universities and Mount
Gould Hospital, the area combines
relatively affordable property with
some of the UK’s highest rental yields,
averaging 10.2% annually. It’s no
surprise, then, that PL4 now ranks as
the second most popular investment
location in our analysis. Similarly,
Loughborough’s LE11 is proving
popular for its university-led demand
and strong tenant profile, with yields
averaging 8.0%.
With Plymouth leading the charge,
aractive returns can be seen across
the South West more broadly, with
landlords in the region achieving the
UK’s highest year-on-year rental yield
growth, up 0.79 percentage points to
8.06% as of the end of June this year.
Zooming out to look at England,
Scotland and Wales, our lending data
shows how rental yields have been
robust over the past year, averaging
near record highs at 7.11%.
This demonstrates how, in a
market shaped by rising costs and
regulation, landlords are adapting,
pivoting towards areas where the
numbers stack up and demand is
consistently strong. And they’re
doing so strategically, by buying into
communities that need and benefit
from good-quality rental housing.
Additionally, when we view all our
top-performing postcodes through a
different lens, one thing that sticks
out is the dominance of terraced
houses. These properties are not
only affordable for investors but also
adaptable. Many can be converted
into houses in multiple occupation
(HMOs), supporting multi-tenancy
arrangements and boosting yields,
while still serving as comfortable
family homes when needed. They
offer flexibility for both landlords and
LOUISA SEDGWICK
is managing director of
mortgages at Paragon Bank
tenants, which is a vital and oenoverlooked trait in a changing market.
This strategic focus doesn’t mean
landlords are abandoning other types
of property and turning their backs on
the rest of the UK; it’s a case of their
acquisitions reflecting local demand.
While terraced homes dominate in the
Midlands and North, in London flats
form a significant part of portfolios,
which are geared towards markets
that are more prominent in the capital
compared to other parts of the UK –
young professionals being an example
that springs to mind.
According to research carried out
by Pegasus Insight on our behalf, six
in 10 landlords operate in London
and the South of England, and 56%
only let property in the area where
they personally live. While this is
likely influenced by the benefits of
an in-depth understanding of local
markets and being on hand to address
any issues, the research reveals that
a notable 28% are active in other
regions, too. This is a sign of an
increasingly mobile landlord cohort
that is willing to look beyond their
own borders for the best propositions.
While this type of considered
investment helps to strengthen
portfolios, it also supports vital
parts of the UK economy. Students,
NHS workers, and employees in
logistics, tech, and education rely
on the flexibility and availability of
the private rented sector. Landlords,
supported by buy-to-let finance, are
helping meet that need. ●
