Luton Property Investment: Why Invest in Luton Buy to Let?

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Luton property investment is one of the more exciting up-and-coming locations in the UK. With strong capital growth potential and repeatedly voted the best commuter town, Luton buy to let is well worth considering by investors. Keep reading this detailed guide to find out more.

Liverpool. Manchester. London. If you know anything about property, you’ll know that these three cities often shoot to the top of any investor’s list. But what about Luton property investment?

Located in the East of England region, the Bedfordshire town of Luton may not be the obvious choice when it comes to property.

However, after years of strong growth, affordable house prices, and a reputation as an ideal commuting location, Luton may be the perfect hotspot for keen investors to consider for the future.

Contents - Luton Property Investment 2021
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Luton Property Investment 2021



Contents - Luton Regeneration
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Luton Regeneration



Contents - Transport and Amenities
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Transport and Amenities



Contents - Where to Invest in Luton?
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Where to Invest in Luton?



To get the best deals in property and pick out the best investment, you need to keep an eye out for up-and-coming areas. It’s why so many people pick Liverpool and Manchester over London, as the two North West cities have strong growth potential.

The same can be said for Luton. While the town isn’t established as a property hotspot, the evidence suggests it will be, with Luton buy to let becoming increasingly popular for those looking to invest in southern areas without paying the premium.

With this in mind, let’s explore the potential behind Luton property investment and identify why you should consider Luton buy to let as your next investment.

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Why Invest in Luton?

With a population of 218,045 in 2019 and a location just 22 minutes from London, Luton is widely considered the best commuter town.

In both 2018 and 2019, the town was heralded as the ultimate London commuter hotspot by estate agents Jackson-Stops, thanks to its proximity to the capital and far lower house prices.

London is infamous for its high costs, and families struggle to match these costs and rise up the property ladder. The same can be said for investors, who are usually priced out of London real estate.

Luton offers a compelling alternative. Not only are house prices over £683,881 cheaper in Luton than London, according to Zoopla and the UK House Price Index, but growth rates are also far higher.

Liverpool Georges Dock Building Liverpool Georges Dock Building

In fact, according to the latest Savills predictions, the East of England is set to see house prices rise by 17% by 2025, compared to London’s dismal 12.6% growth rate.

Factoring in rental yields, regeneration efforts, unmatched transport and amenities, and Luton buy to let quickly becoming known as a top investment hotspot.

But don’t just take our word for it.

Luton was voted the best buy to let location for three consecutive years between 2016 and 2018, according to the LendInvest buy to let index, which ranks 105 postcodes on factors like capital growth, sales, yields, and rental price increases.  

At the end of 2020, the latest property news found that Luton housing was the number one location for first-time buyers due to its affordable prices. 

This reputation has continued all the way into 2021, with Luton ranked in the top 25 buy to let areas alongside cities like Manchester and London, according to Aldermore Bank’s city tracker. 

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Luton Property Investment 2021

As one of the best property investment opportunities in 2021, Luton is an exciting prospect for investors in the future.

If you want to buy a property in Luton, you can expect some affordable prices.

According to the UK House Price Index, current house prices in Luton sit at an average of £242,370, which is 4.95% higher than a year prior.

This is exceptionally low for the area, with the average southern property valued at £345,075. A typical Eastern property is priced at £306,346.

It’s also cheap when you compare it to other commuter towns. The town of Slough is widely considered one of the best south-eastern locations for property investment.

Here, you can expect house prices of £308,428, which is 27% higher than Luton.

Finally, Luton is also more affordable than the UK average house price, which is currently valued at £250,341.

Overall, if you’re looking for a property close to London, you’re simply not going to find prices as low as this.

This means that if you buy a property in Luton, you’re likely getting one of the better deals in the southern region.

Luton Property Investment 2021 Luton Property Investment 2021

House Price Growth

What makes Luton property so exciting for investors is the likelihood of capital growth.

As already established, Savills has provided a Luton house price forecast. Here, there’s expected to be a 17% increase in house values in the Luton region over the next four years. 

This means if you buy a property in Luton in 2021, you could see a capital growth rate of 17% by 2025. It could also be even higher!

These predictions will likely come to fruition, especially when you consider the growth in house prices in Luton over the last 20 years.

Since 2001, house prices in Luton have increased by over 218%. For comparison, this is higher than thriving cities like Birmingham (206%) and Newcastle (179%) and is only slightly lower than Liverpool’s massive growth rate of 221%.

This growth rate has continued over the years, with fairly strong growth in house prices in Luton over the last five years.

Take a look at the following graph for past Luton price growth to help see if the Luton house price forecast will be accurate.

Average Luton Property Prices 2016 - 2021 Average Luton Property Prices 2016 - 2021

Between February 2016 and February 2018, house prices Luton increased by a mammoth £35,587, or a percentage increase of 17.2%.

After this point, prices dropped somewhat over the following two years before recovering again in 2021.

Why has this happened?

Well, economic uncertainty has dominated the UK for the past three years, with the impact of Covid-19 and Brexit being felt across the country.

2019 had a substantial impact on the UK housing market, with uncertainty involving the completion of Brexit and the country’s leadership, with Prime Minister Theresa May stepping down from her position.

It was only until December that the latter was rectified with Boris Johnson winning a landslide in the 2019 General Election.

As house prices started to recover, the pandemic and lockdown hit the UK, again setting back capital growth in the UK.

What does this all mean for investors?

Looking at the data, it seems that the dips of economic uncertainty in the housing market may be behind us and that the Luton house price forecast may be accurate.

House prices Luton have increased comfortably since the UK exited its first major lockdown, with prices now almost 5% higher than a year prior.

The level of price growth will likely return to the likes seen between 2016 and 2018, making Luton buy to let well worth considering.

This means if you want to buy a property in Luton, you are in line for some impressive capital growth potential.

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Commercial street in Luton in sunny weather Commercial street in Luton in sunny weather

Rent and Rental Yield

One factor that makes Luton ideal for residents looking to work in London is the rent.

While London rent sits at a staggering average of £2,643 PCM, according to Zoopla, Luton properties sit at a far more reasonable £801 PCM.

On the surface, this is bad news for investors, with London investors set to earn £31,716 per year through rent, while Luton investors will make only £9,612.

However, when you consider house prices and rental yields, Luton is the clear option for a property investor.

Rental yield is the return on your investment you earn through rent. It’s calculated by dividing your yearly income by the purchase price of a property and then multiplying by 100 for a percentage.

These percentage yields are usually considered the most essential aspect for a property investor. It shows how soon you can earn a profit on your initial cash injection.

Using Zoopla’s house price and rent data, rental yields in London are calculated at 3.42%.

On the other hand, Luton can net you yields of 3.97%.

Rent and Rental Yield in Luton Rent and Rental Yield in Luton

Moreover, you also have to factor house prices into this equation.

Property prices often differ between sources, but according to Zoopla, the average London property is valued at £926,251.

This means that you can buy almost four properties in Luton for just one in London.

Therefore, if you bought these properties, you would stand to earn around £38,448, over £6,700 more than in London.

Buying multiple properties is also a safer decision too.

For instance, let’s say one of your properties is left vacant.

While this isn’t ideal, you will still be earning income on three other properties. Whereas, if you only had one property in London, you would be making no income until you found a suitable tenant.

Furthermore, due to the huge London prices, finding a tenant easily could be difficult.

Rental growth is also an important factor to consider.

According to Homelet, the average rent in the Luton area has increased by 6.9% year-on-year. Comparing this to London and rent prices have decreased in the capital by a whopping 5.3%.

Considering all the latest Luton property data, it seems that the town is a smart southern investment choice for the future compared to London.

Regeneration

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Transport and Amenities

Transport and Amenities in Luton Transport and Amenities in Luton

With the identity as a London commuter town, transport is vital for Luton’s success. 

Luckily, the town is overflowing with fantastic transport systems making it one of the most ideal hotspots in the UK. 

The already mentioned London Luton Airport is one of the key components of the town’s success, accounting for thousands of jobs and providing international travel to over 18 million people.  

Luton is also located right by the M1, and also has easy access to both the M25 and the A1, some of the most used routes in the UK. 

Alongside these car routes, Luton features three major train stations, providing access to London in just 22 minutes. You can even get to the Midlands in just over one hour. 

These routes even extend to international travel, with direct train links to St Pancras International, which allows visitors access to the Eurostar journeys to Paris or Brussels.  

For residents interested in getting around Luton, there is also the fantastic Luton and Dunstable busway to consider. 

Luton Airport Luton Airport

This transport link connects various areas like Luton, London Luton Airport, Houghton Regis, and Dunstable, with services every seven minutes. 

This means you can travel traffic-free between Luton and Dunstable town centres in only 15 minutes. 

Transport is vital for a region’s success, as it ensures easy travel to local amenities like restaurants and bars, as well as to job opportunities in the area and beyond. 

All these transport links make it easy to understand why Luton is considered the ultimate commuter town. 

Notably, these transport links also make it ideal for students travelling to university. 

The nearby University of Bedfordshire features 14,000 students and has six campuses, one of which is in Luton.  

Students travelling to university will have it easy thanks to these transport links. 

Where to Invest? The Best Areas to Live in Luton

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House Prices by Luton Postcode

Now that we’ve looked at the best areas to live in Luton, let’s take a deep dive into property prices you can expect by Luton postcode using the latest Zoopla data. 

House prices in Luton postcodes House prices in Luton postcodes

As you can see from the table, the most affordable location for flats is LU1, with flats available from just £154,640. 

The LU1 postcode is also the most affordable overall, with average house prices Luton from around £257,752. 

The most expensive location, on the other hand, is the LU2 postcode. You can expect house prices for almost £495,000 on average. 

Average rent and rental yield in Luton Average rent and rental yield in Luton

Rental Yields by Luton Postcode

While the LU1 postcode is the most affordable location for house price, it is the third worst location for rental yields due to the low average rent of £713. 

Currently the best location for rental yields is LU4, which offers some of the highest rental figures and the highest rental yield of 3.97%. 

If you’re looking for a more affordable southern locations with fairly strong yields, the LU4 postcode in Luton is likely the best place for you. 

LU4 features several wards and suburbs including Challney and Lewsey.  

FAQs

To help you learn more about whether you should invest in houses to let in Luton, or find houses in Luton for sale, here are answers to some of the most commonly asked questions about Luton property investment. 

Some of the best areas to live in Luton include WigmoreStopsley and Leagrave. 

According to the UK House Price Index, the average houses in Luton for sale are valued at £242,370. This is an increase of 4.95% year-on-year. 

Yes, Luton is a good place to invest in property. It was twice named the best commuter hotspot by estate agents Jackson Stops, and was voted the best buy to let location for three consecutive years by LendInvest. 

Luton house prices dropped slightly in 2020 before increasing again towards the end of the year. Now in 2021, Luton house prices are 4.95% higher than a year prior. 

Yes, Luton house prices are likely to rise. Savills has estimated property in the East of England will increase in value by 17% by 2025. 

This means if you’re a property investor looking at houses to let in Luton, or houses in Luton for sale, you can expect significant capital growth over the coming years. 

What Are the Best Areas to Live in Luton?

Some of the best areas to live in Luton include WigmoreStopsley and Leagrave. 

What Are the Average House Prices in Luton?

According to the UK House Price Index, the average houses in Luton for sale are valued at £242,370. This is an increase of 4.95% year-on-year. 

Is Luton a Good Place to Invest in Property?

Yes, Luton is a good place to invest in property. It was twice named the best commuter hotspot by estate agents Jackson Stops, and was voted the best buy to let location for three consecutive years by LendInvest. 

Are House Prices Dropping in Luton?

Luton house prices dropped slightly in 2020 before increasing again towards the end of the year. Now in 2021, Luton house prices are 4.95% higher than a year prior. 

Will Luton House Prices Rise?

Yes, Luton house prices are likely to rise. Savills has estimated property in the East of England will increase in value by 17% by 2025. 

This means if you’re a property investor looking at houses to let in Luton, or houses in Luton for sale, you can expect significant capital growth over the coming years. 

After years of strong growth, affordable house prices, and a reputation as an ideal commuting location, Luton may be the perfect hotspot for keen investors to consider for the future.

Daniel Williams, RWinvest

Five Facts About Luton – Is Luton a Good Place to Live?

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We hope you enjoyed our guide to Luton property investment and investment property. 

If Luton buy to let sounds like an attractive choice and you want to start your investment property journey, why not consider RWinvest for your investment? 

If you’re looking for houses to buy in Lutonwant to find property in Luton, or are looking to explore the wider UK property market, there’s no finer investment company than us. 

With over 17 years’ experience in property investment, we were voted the North West’s best property business in 2020. 

As one of the best property investment companies in the UK, we can help you make the best investment possible. 

We’ve already helped 25,000 happy investors, and we can help you too. 

We have some exciting offmarket property opportunities on the horizon, with some fantastic property available in property hotspots across the UK. 

Contact our expert sales team today to explore all your UK property options today 

Prices start from just £92,950 with massive returns of up to 8%. Act fast today and start investing in property now while stocks last. 

Alternatively, check out all our in-depth guides to other UK towns and cities. 

Learn more about Liverpool property investmentManchester property investment, and Slough property investment today. 

Disclaimer: This guide was updated in May 2021. When you read, the data displayed may no longer be accurate.  

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