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Luton Buy-to-Let Guide

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    Everything You to Know About Luton Buy-to-Let

    Luton has made a name for itself in the world of buy-to-let property, proving there’s more to this location than the famous airport. With more affordable property prices than many surrounding areas, Luton is attractive to investors for many reasons.

    But if you’re in the market for a property in a commuter hotspot, there are plenty of other popular destinations to consider, so why choose Luton?

    This guide will give you the lowdown on Luton and help you decipher what to invest in right now.

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      Buy-to-Let Property Prices in Luton

      According to Rightmove, the average property in Luton went for £319,279 over the last year. This is 6% up on the previous year and 13% up on 2020, so Luton property has grown in value in recent years.

      The UK House Price Index shows that the average UK property is worth £287,546, less than the current average price for a property for sale.

      While Luton property is pricier than the UK average, Luton property evangelists usually look at the town compared to London buy-to-let. According to the UK House Price Index, the average London property price is £527,979, making Luton a much more affordable prospect for people working in the capital.

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        Buy-to-Let Rental Market in Luton

        According to housesforsaletorent.co.uk, the average monthly rent in Luton is £1,131, and annual rent growth in Luton is rising dramatically, running at over 20%. But the area is still attracting plenty of tenants. The region of Bedfordshire has one of the highest rental demands in the country, according to a study from Barrows and Forrester.

        While the price tags on the property are fairly expensive, the high average rent means a decent rental yield can still be found, with some parts of Luton reaching over 4%. But this is still low compared to many other areas of the country, such as the North West.

        Buy-to-let student accommodation is another feasible investment opportunity in Luton, as the area is home to the Luton campus of the University of Bedfordshire.

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        Luton Airport

        Buy-to-Let Investment in Luton: Area Breakdown

        The Luton Town Centre is a popular place to live in, close to amenities and popular with students. Some of Luton’s cheapest buy-to-let properties for sale can be found in the town centre and inner suburbs, such as Farley. Luton Town Centre is just 22 minutes away from central London by train, so this is a convenient place for commuters to live.

        But if you’re looking for more suburban areas for your investment, there are many in-demand residential districts to the east. Some of these are considered more upmarket areas, and this side of town offers good access to Luton Airport. This part of Luton includes places like Crawley, High Town, Round Green, Stopsley, and Wigmore.

        To the north, some leafy suburbs are popular with families, such as Briscot, Bramingham, and Sundon Park. In West Luton, you can find areas like Challney and Lewsey. This region is a popular choice for commuters thanks to convenient access to the M1.

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        Luton Town Centre (LU1)

        Average Property Prices in Luton Town Centre

        £301,304

        Average Rental Yield in Luton Town Centre

        3.7%

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          London Luton, United Kingdom - 24 March 2019: Photos of Luton Town centre George street Luton Town hall building with tourists people around near George's square.

          Farley Hill

          Average Property Prices in Farley Hill

          £258,781

          Average Rental Yield in Farley Hill

          4.40%

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          Stopsley

          Average Property Prices in Stopsley

          £316,851

          Average Rental Yield in Stopsley

          3.92%

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            Bramingham

            Average Property Prices in Bramingham

            £324,219

            Average Rental Yield in Bramingham

            4.26%

            Luton aerial view

            Challney

            Average Property Prices in Challney

            £302,169

            Average Rental Yield in Challney

            4.39%

            (Average property prices taken from Rightmove, gross rental yield estimates calculated with figures from housesforsaletorent.co.uk)

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              What is the Best Area of Luton to Invest in?

              On average, the most affordable property prices can be found in Luton Town Centre, especially in the inner suburbs. The LU1 postcode offers a gross average rental yield of 3.7%, but it can vary a fair amount depending on the specific area. For example, Farley Hill has cheaper property on average compared to the whole LU1 area and can offer a decent yield of around 4.4%.

              Average rental yields can also reach over 4% in well-favoured suburbs such as Challney and Bramingham.

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                Why You Should Consider a Buy-to-Let Investment in Luton

                Commuter Hotspot

                As part of London’s commuter belt, Luton has long been considered one of the best towns for those working in London but wish to avoid the capital’s premium on living costs.

                Those living in Luton can benefit from excellent transport links, making it a convenient place for commuters. When it comes to road travel, Luton is located right by the M1 and can offer easy access to both the M25 and the A1 – some of the most used routes in the UK.

                The town’s railways are also a big draw for commuters as Luton residents can speed into London in just 22 minutes. Additionally, there are reliable bus links to surrounding towns, and of course, it’s worth mentioning London Luton Airport, which can be found in the LU2 area of Luton.

                Overall, this is good news for buy-to-let investors in Luton, who seem set to profit from rising interest in the area, resulting in more significant capital gains, consistent rental demand and higher rental income.

                Regeneration

                Regeneration has previously contributed to Luton’s growth as an attractive residential area, and redevelopment efforts are still ongoing.

                The Luton 2040 vision is a continuing project to create an ambitious future for Luton, create new jobs and homes, and boost economic activity. It includes a  £160 million redevelopment of Luton airport by 2030, improvements to The Mall Luton, a brand new stadium for Luton Town Football Club, and a revamp for Luton’s iconic Hat District, among other plans.

                The regeneration potential of Luton makes it more appealing to property investors who can invest in the area while the prices are low and benefit later on from increased capital value when they sell the property and more rental demand and rental income.

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                  Luton New-Builds

                  New-build property investment stands out as a highly favoured investment avenue. The allure of newly built developments lies in the minimal maintenance required before sending them to market, making them highly appealing to tenants who can move in at their convenience. Consequently, landlords can earn returns on their investment faster than older properties necessitating renovation.

                  Last year, the Luton 2040 vision saw a £20 million boost for new housing developments, which could see around 405 new homes introduced to the area. Once completed, the planned development (named ‘The Stage’) is expected to create employment opportunities for local people and support the growth of local businesses.

                  With ongoing shifts in property market trends, investing in newly developed properties such as this has the potential to result in increased rental growth in the forthcoming years.

                  Read More: Explore further into this investment trend through our latest buy-to-let guides, with topics ranging from new-builds in Islington to the most current hotspots across the UK!

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                    Off-Plan Property in Luton

                    Although new-build properties offer modernity and efficiency, they often have a higher price tag. Opting for off-plan investment in new-build properties can provide investors with increased affordability and convenience.

                    Engaging in off-plan property investment involves purchasing properties during the early stages of construction, typically at a rate significantly lower than standard market prices. This early involvement often leads to greater capital appreciation, with the property’s value steadily increasing as construction progresses.

                    As mentioned, newly developed properties also tend to attract strong tenant interest, potentially leading to higher rental yields for investors.

                    Research suggests prime off-plan opportunities are frequently found in densely populated urban cities, particularly those with dynamic infrastructure and ongoing regeneration work. While there is potential for off-plan and new-build investment in Luton, investors may find greater success in UK cities with a higher concentration of ongoing construction projects, such as Liverpool or Manchester.

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                      How Does Luton Compare to Other UK Regions When It Comes to Buy-to-Let?

                      Luton has many advantages as a buy-to-let location, especially compared to London and other cities. The main reason is that the property is comparatively cheaper, making it more accessible and easier to find more lucrative rental yields.

                      But overall, northern cities still outperform southern areas when it comes to profitable buy-to-let ventures. Property experts Savills have forecast that the East of England region where Luton is situated is set to grow 16.7% by 2028, while other areas such as the North West are predicted to climb in value 20.2% in the same time frame.

                      For more information surrounding North West investment, take a look at our recent Warrington Property Investment guide.

                      Apart from capital growth, Luton also falls short when it comes to rental yields. They may be more attractive than London yields, but compared to major northern cities such as Liverpool (7.77%) and Manchester (9.12%), most properties in Luton can’t compete.

                      Those looking for a student investment property typically go after cities with larger student populations to ensure consistent demand. Established student cities such as Liverpool boast rental yields of 8.25%, according to a study by Paragon Bank.

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                        Want to Invest in Luton in 2024?

                        Luton is an excellent alternative for investors who wish to invest in London but see the cost as too high or the rental yields too low. Luton has enough to brag about when it comes to buy-to-let opportunities, and it’s an undeniable hotspot for the South of England.

                        But other regions are forecast to experience much more capital growth, and because of the more affordable property, the financial barrier to entering the northern property market is much lower. Those not restricted to the South may find North England much more profitable, with preeminent cities such as Liverpool and Manchester.

                        Buy-to-let investors are much less constrained by location, thanks to a rise in the popularity of hands-off investments. These days, investors can choose an area based on profitability alone and leave the day-to-day management to a third party.

                        With many factors, selecting the ideal location for a buy-to-let investment can be time-consuming. RWinvest’s extensive collection of resources empowers you to make informed decisions throughout the investment process.

                        See our most recent guides below:

                        Map of Luton

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                        Author

                        Jessica Ferris

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                        Jessica Ferris is a property writer at RWinvest, helping our readers stay ahead of property market trends with the latest news and statistics.

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