Commuter Towns Provide Best Rental Growth for Investors

Commuter towns continue to be marked out as hotspots for property investment and buy to let landlords, as close links with London prove a top selling point.

The latest research from online investment platform LendInvest saw popular commuter locations including Watford, Colchester and Rochester in Kent make sizeable gains in rental price growth. Northampton was the only area outside the South East marked out as a bountiful investment opportunity.

The firm’s annual quarterly report into the buy to let sector saw Romford top the league following an 8 per cent rental price growth, knocking Luton from its prime position.

The index, which ranks postcodes based on a combination of four factors: capital value growth, transaction volumes, rental yield and rental price growth, saw a pervading stability across its top scorers, which also included locations such as Dartford in 3rd place, with a rental yield of 4.74 per cent, and Southend on Sea in 7th place, with a yield of 4.5 per cent. Romford and Luton scored rental yields of 5.24 per cent and 4.73 per cent respectively.

However, there was a far more diverse geographical range at the other end of the scale, with Swansea, Newcastle and Llandudno recording a 0 per cent price growth, suggesting that investors in those areas would struggle to see returns on their money.

Co-founder and CEO of LendInvest, Christian Faes, said: ‘Consistency is clear here: suburban parts of the South East of England continue to offer the best opportunities for investors, while Inner London continues to underperform. The absence of a large shake-up in the Top 10 buy-to-let postcodes this quarter shows some stability in the market following a year of market-moving uncertainty and geopolitical shocks. Landlords and investors must remember that considering rental yield isn’t enough; it’s critical to find a property that impresses across all metrics. In the quarter ahead, we’ll be watching closely a number of areas that could edge towards the Top 10, like Bristol (ranked number 15), Milton Keynes ( number 16) and Manchester (number 21).’

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