The Complete Guide For 2023.

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property investment

Luton Property Investment In 2023

Ideally located on the London commuter belt, the Bedfordshire town of Luton is quickly becoming one of the best places to invest in property in the south of England.

But why is this the case? Why should you consider a Luton property investment?

Find out in this complete 2022 guide to property investment in Luton.

On this page, you’ll learn about the latest Luton property market data to see if investing in Luton is the right choice for you.

Let’s get into it:

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Why Invest In Luton?

Widely seen as the ultimate London commuter town, Luton is rising in popularity amongst south-eastern tenants.

Luton property investment offers a more affordable living experience than London while only 22 minutes away.

And it’s the perfect way to tap into the London property market without paying the high fees.

So, is it worth buying property as an investment in Luton?

Find out below with three reasons why Luton property investment is a good idea for property investors in 2022:

  1. Invest in Luton for Affordable Property Prices

Unlike most locations in the south, Luton house prices are incredibly affordable.

As of April 2022, the average property price in Luton was £267,184 (Land Registry UK House Price Index).

While this may not seem affordable compared to places up North, they’re very low for the southeast area.

Luton house prices were 5% below the UK average house price in April 2022 and a massive £115,607 below the South East average.

It gets better:

Despite being just 22 minutes from London via train, average Luton house prices were £262,645 below the London region average!

No wonder the town was voted the best place for first-time buyers in December 2020!

In fact, Land Registry data shows that Luton first-time buyers paid an average of £234,937 in April 2022 – 50% below London.

It sounds too good to be true, right?

Well, unfortunately, it’s not all good news:

Luton Property Market Rental Returns 

Luton underperforms for rental yields.

As of June 2022, Luton’s average rental yield was 4.27%.

This is because of an average rent of £951 per calendar month (PCM).

For context:

London generated 8.71% returns in June 2022.

While Northern locations like Manchester and Leeds produced average rental yields of 7.58% and 8.15%, respectively.

While Luton’s rental yields can get higher with rental growth, it shows that Luton may not be the best place for income-focused investors in 2022.

That hasn’t stopped many Luton property investors from seeing success, though.

In fact, the town was voted the top buy-to-let location in England for three consecutive years in 2016, 2017, and 2018.

  1. Invest in Luton for Strong House Price Growth

While the Luton property market may not be the top dog for rental returns, it makes up for it with huge capital growth potential.

As of April 2022, Luton house prices were 10.89% higher than a year ago, increasing by £26,229.

This growth rate was higher than London (7.86%), Brighton (7.90%), and Southampton (10.27%) but fell short of the UK average (12.37%).

Data: Land Registry, April 2022. Quarterly prices are determined by calculating the average price.

Luton town saw a significant growth in house prices between Q1 2021 and Q1 2022 in line with the UK average.

Growth has continued for many years in Luton.

In fact, the Bedfordshire town’s house prices were £35,579 higher (15.36%) in April 2022 than April 2017.

And over a 10-year period (April 2012 vs April 2022), Luton recorded a capital growth of £113,307 – an 84.5%.

In comparison, this was higher than London’s five- and 10-year growth rate, which saw prices rise by 10.43% and 77.16%, respectively.

  1. Invest in Luton for Rising Rental Demand 

Demand is essential for property investment success as it’s usually the catalyst for growth in property values and rent.

Excitingly, property investment in Luton is generating some seriously high demand in 2022.

Experts estimate that 1,417 new Luton housing need to be built each year to meet demand – over three times the current amount.

So, why do so many people want to move to Luton?

Affordability.

Despite Luton being just 22 minutes from central London and providing all the employment opportunities and benefits of London living, it’s vastly more affordable than the capital.

Alongside affordable property prices, Numbeo estimates that consumer prices, including rent, are 31.92% lower in Luton than in London.

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Luton House Price Forecast 2023

You might be wondering:

Are house prices going up in Luton?

As of April 2022, house prices in Luton were 10.89% higher than a year prior.

And this growth is set to continue, according to predictions from JLL.

  2022 2023 2024 2025 2026 Average pa
Luton 5% 4.5% 3.5% 4.0% 4.0% 4.2%
London 6% 5.5 3.5% 4.0% 4.5% 4.7%
UK 4.5% 4.5% 3.0% 3.5% 4.5% 4.0%

 

JLL predict that the East of England (Luton’s region for administrative purposes) will see an annual average growth of 4.2% by 2026.

Although this is lower than London’s 4.7%pa prediction, Luton’s expected growth exceeds the UK average by 0.2%.

Predictions from Savills are more conservative.

They estimate the East of England will see a total growth of 8.6% between 2022 and 2026 – 3.6% higher than London but 4.3% below the UK average.

Whichever prediction you choose to believe, the Luton house price forecast suggests that prices will continue to climb in Luton and the UK,

Just keep in mind that there’s no way to accurately predict how house prices will grow over the coming years.

You shouldn’t make investment decisions based on future predictions (but they can help guide you).

Want to learn more about Luton property? View our complete guide.

Is Luton A Good Place To Buy Property?

While we’ve discussed some top reasons why you should consider a property investment in Luton, you might still be asking:

Is Luton a good place to buy a property?

To answer this correctly, we’ll have to dig deeper.

Statistics don’t always tell the whole story to property investors.

And it’s essential to understand what’s driving the market to see if it’s sustainable.

After all:

Property investment is a long-term venture – you want to ensure it can go the distance.

Let’s take a deep dive into the Luton property market and explore its business opportunities, regeneration efforts, transport links, and population to see if the town is a good place to buy.

A significant factor behind Luton’s pull is its fantastic employment opportunities.

While many major companies opt for the Capital, an increasing number are opening up headquarters in Luton to take advantage of local commuters and lower running costs.

Luton is likely best known for engineering and manufacturing and has a significant pharmaceutical, technological, and automotive business base

The biggest employers in the area include Vauxhall Motors, Astra Zeneca, and EasyJet, with many smaller businesses found at the Butterfield Technology Park.

That’s not to mention the London Luton Airport – one of the UK’s fastest-growing airports and an employer of 9,400 people.

Voted London’s best commuter town by estate agents Jackson Stops, Luton has some of the best connectivity in the South.

Ideally located next to the M1, M25, and A1, Luton has some of the UK’s most used roads on its doorstep.

The town boasts three major train stations for commuters without a car and connects residents to London in 22 minutes.

And who can forget London Luton Airport, helping to connect 18 million people annually to locations across the globe?

But Luton is much more than just a commuter town.

Luton plays host to the UK’s biggest one-day carnival, the Luton International Carnival, and boasts its own football team, Luton Town Football Club.

Urban regeneration can be a big driver behind growth, with an improved quality of life usually leading to higher property demand in an area.

Excitingly for Luton property investors, there are five major projects ongoing that could see house prices soar in the coming years.

These include:

  1. London Luton Airport: Around £160 million is set to be spent at the international airport to create 10,000 jobs over the next decade.
  2. Luton Town Football Club: A brand-new stadium is set to be built for Luton Town FC to seat 23,000 people and generate £68 million for the local economy.
  3. LU20N: This mixed-use scheme adds 50,000 sqft of retail space and almost 800 new homes to Luton.
  4. The Hat District: The iconic Hat District area is set for 25,000 sqft of new workspace.

Luton Investment Framework: Luton’s biggest regeneration project, the Luton Investment Framework will see £1.5bn of investment to enhance Luton town centre and beyond. It’s estimated that the project will create 18,500 jobs.

It’s important to understand the population of an area before you invest.

Why?

Knowing the age groups of a population can help you decide what type of property you should buy for the biggest chance of success.

For example:

A high population of young professionals could mean you buy apartments.

According to Plumplot, 367,000 people lived in the Luton postcode in 2020 – 16.9% higher than in 2002.

In the town, the average age was 37.8 – below the national average of 40.5.

This is a good sign as younger people are often the lifeblood of an investment as they are more likely to rent than own a home.

Plumplot also found a high density of under 30s in the town centre, leaving room for investors to target a more affordable investment apartment in Luton.

Luton has one of the UK’s youngest populations.

A big factor behind this is the growing number of students.

Although Luton may not be the first place that comes to mind when considering a student property investment, the town has a decent-sized student sector.

Luton features a campus from The University of Bedfordshire that attracts almost 5,000 students to Luton town centre.

While this doesn’t compare to the massive student population in London, there are enough potential tenants to consider a student property investment in Luton.

Work is ongoing to attract even more students, with past projects including a £46 million library in 2019.

Best Buy to Let Areas Luton 2023: 7 Luton Postcodes Ranked

Average House Prices in LU1: £316,466 

Average Rental Yield in LU1: 2.97% 

Surprisingly, the popular postcode of LU1 is generating the worst rental yields in Luton.

Covering the south of the town, LU1 features Aley Green, Caddington, Lower Woodside, Slip End, and Woodside.

Although house prices aren’t the highest on this list, a low rental income of only £783 has led to poor returns of 2.97%.

So, does this mean you shouldn’t invest in LU1?

Not at all!

Every property is different, and just because an area’s average is low doesn’t mean you can’t find an incredible investment opportunity.

Average House Prices in LU2: £318,263 

Average Rental Yield in LU2: 4.70% 

Widely considered Luton’s best place to invest in property, LU2 generated the highest rental returns in June 2022.

LU2 covers the east of Luton and features areas like Chiltern Green, Cockernhoe, East Hyde, Peters Green, Wandon Green, and London Luton Airport.

Although house prices are pricier, rent of £1,247 (the highest in the town) helps generate decent returns of 4.70%.

Average House Prices in LU4: £276,773 

Average Rental Yield in LU4: 4.59% 

LU4 covers the west of Luton with areas like Chalton, London Farm, Lewsey, and Challney.

Thanks to the nearby M1, LU4 is popular amongst commuters.

It is filled with many charming grade-listed buildings.

Despite this, house prices are the most affordable out of the seven Luton postcodes, helping to deliver returns of 4.59% with a monthly rent of £1,059.

Average House Prices in LU3: £291,762 

Average Rental Yield in LU3: 4.49% 

Travel north of Luton, and you’ll find this Luton postcode.

LU3 covers places like Barnfield, Biscot, Sundon, and Streatley.

LU3 is primarily made up of semi-detached homes and provides a leafy green escape for many families.

Yet prices are still affordable compared to other postcodes on this list, with a monthly income of £1,092 leading to the third-highest rental returns in Luton of 4.49%

LU5 <h3>

Average House Prices in LU5: £300,295 <h5>

Average Rental Yield in LU5: 3.92% <h5>

Outside the town of Luton, LU5 covers the nearby area of Dunstable and features locations like Bidwell, Chalgrave, Harlington, and Toddington.

Dunstable is found outside Luton across the M1 and is a hotbed for businesses like Amazon and Superdrug.

House prices here are slightly above those seen in LU5, with a rental income of £980 and returns of 3.92%.

Average House Prices in LU6: £356,315 

Average Rental Yield in LU6: 3.28% 

Another Dunstable postcode on this list, LU6 covers the west of the town.

It consists of Eaton Bray, Northall, Sewell, Totternhoe, and Whipsnade.

The second priciest Luton postcode, LU6 properties are available at a sizeable £356,315 on average.

Rental income isn’t high enough to offset this price tag, with £973 leading to disappointing returns of 3.28% – not ideal for any income investors.

Average House Prices in LU7: £363,328

Average Rental Yield in LU7: 3.27% 

The penultimate postcode on our list, LU7 covers the market town of Leighton Buzzard, found west of Luton town.

Areas in LU7 include Bragenham, Cheddington, Hockliffe, Soulbury, and Wingfield.

Luton property investors will find the region’s highest house prices in LU7, with a substantial average of over £363,000, making this one of the worst returning postcodes in Luton.

The second priciest Luton postcode, LU6 properties are available at a sizeable £356,315 on average.

Rental income isn’t high enough to offset this price tag, with £973 leading to disappointing returns of 3.28% – not ideal for any income investors.