The latest LendInvest buy-to-let index report focused on university towns, with these locations the top performers occupying four out of the top five spots.

The report is published quarterly and it ranks each postcode area around England and Wales based on a combination of four critical metrics: capital value growth, transaction volumes, rental yield and rental price growth.

•   BTL remains a 'sound investment option'
•   A view on the future of buy-to-let
•   BTL mortgage flat fees drop

Key findings for September 2017 include: 

• Luton – a convenient commuter town north west of London – retained top spot
• Colchester climbed the table from fourth to second, eclipsing near-neighbour Rochester (fourth), which saw falls in both rental yield and capital gains
• Manchester moved into the top three on strength of rental yields and capital gains
• Hull climbed 28 places from 33rd to fifth, signalling further the upward mobility in the northern markets.

Ian Boden, sales director at LendInvest (pictured above), said: “This quarter’s data supports the strong market sentiment that the impact of price sensitivity in London and the South East isn’t being felt to the same degree elsewhere around the country.

“Cities such as Hull and Nottingham making significant gains in the index (from 33rd to fifth and 35th to 12th respectively) is encouraging, and points to competitive market conditions in those areas and higher than average levels of activity.

“Maintaining a balance between the types of tenure in our housing system is more important than ever.

“We would expect to increasingly see professional BTL investors become cross-country landlords, and diversify their portfolios by looking beyond their local areas to find the best investment opportunities elsewhere around the UK and entering alternative asset classes.”

The top 10 buy-to-let postcodes

The bottom 10 buy-to-let postcodes

The top 10 postcodes for university cities/towns