Lending Line Official Logo Retina
Call Now
Act Now

UK Buy-To-Let Hotspots: Regions with the Best ICR for Mortgages

Are you looking for the best areas in the UK to mortgage a Buy-To-Let property? Well, you're in luck. We collected March 2024 data of housing index, property prices, and monthly rentals of different regions to calculate Income Coverage Ratio percentage. Let's find out how it can help you.
Expert Mortgage Advisors

Get Your Free Quote

We've helped 1,000's of customers get the perfect mortgage. Submit your details and we'll match you with an expert who will search over 100 lenders to help find you the right mortgage. It's free & doesn't effect your credit score.

Key Takeaways

If you’re anyone in the property market, you must’ve heard of Buy-To-Let (BTL) properties. 

Unlike residential properties, which are bought to live in, BTL properties are purchased with the intent of renting them out to tenants and generating rental income. This type of investment is prevalent in markets with a strong demand for rental properties.

Investing in a BTL property in the UK can be very lucrative. There is a growing demand for rental properties in urban locations and university towns, which can lead to a steady income source for investors.

Further, UK property prices have historically always appreciated, so BTL properties can potentially provide capital gains (although of course this is not a guarantee). 

Additionally, BTL investors can claim specific tax benefits by buying through a LTD company structure if it suits their circumstances. This is just one of many advantages of investing in BTL properties in the UK.

However, the trick to making profits on a BTL investment is to select the proper location for the property. This is extremely important, as the property’s location will determine the valuation and the rental demand. For prime locations, you can charge premium rent.

But how can you decide whether a property is going to be profitable for you or not? What if there was a metric that would allow you to quantify precisely this? 

Thankfully, there is. Meet the Interest Coverage Ratio (ICR), a vital metric that allows you to assess the profitability of a BTL property.

ICR allows investors to understand if the rental income from the property in question would be enough to cover mortgage payments.

Importantly, it is the primary metric used by mortgage lenders within their affordability assessments of rental properties, so is an important component in whether a buy to let mortgage application will be approved. 

A high ICR indicates that the property rental income will be able to cover the repayments and maybe even generate some extra cash. This ensures the viability of the investment.

In this article, we will explore the ICR and how you can use it to ensure proper BTL investments and find the top locations in the UK with high ICR properties.

Let’s buckle up and hit the road.

ICR, or Interest Coverage Ratio, is a general business metric that gauges whether borrowers can pay off their debts.

It can be used by companies and individual investors, such as landlords, who want to determine the viability of their BTL investments.

If you’re a BTL landlord, you can use this metric to help you determine the gross rental income needed to recoup your ongoing interest payments and make a profit. 

ICR is usually calculated as per the following formula:

Interest Coverage Ratio (ICR) Formula

What Is A Strong ICR?

The result is expressed as a percentage, and usually, you’d need to aim for an ICR of at least 125% to get a BTL mortgage as a basic rate taxpayer, with 145% as a higher rate taxpayer.

However, the higher the properties ICR, the better since a high ICR value indicates you can pay off your mortgage and, at the same time, take care of other costs associated with the property as there is surplus monthly rental income.

For instance, if you’re trying to calculate the ICR for a rental property in, say, London, then it might look something like this:

So the monthly rental income from the property is £1,500, multiplying that by 12 we get the annual income which is £18,000.

So, the Annual ICR = (£18,000 / £10,000)*100 which is 180%

To improve your ICR, you’d need to increase your rental income or decrease the annual interest cost, which means taking a mortgage at a lower interest (or a smaller loan amount).

Usually, increasing the first is more manageable, provided your property is located in a spot with high demand.

The following list shows how lenders interpret each level of ICR values:

Apart from trying to determine whether your mortgage will be approved (the Mortgage Affordability Assessment), lenders also use the ICR as a risk assessment tool. The greater the ICR, the lower the risk of the borrower defaulting on their payments.

The ICR also directly determines the amount of money a landlord can borrow. Lenders have benchmarks for this, and we recommend you try to do similar calculations to understand whether you’re getting good affordability from the rental income of the subject property. 

Along with the above, the ICR can also be a factor used by lenders to determine the interest rates for your mortgage. 

Generally, the higher the ICR, the lower the risk and interest rates. For example, you may have to approach specialist lenders who permit properties with a lower yielding ICR and they will charge you a higher interest rate accordingly.

ICR is also used to gauge a landlord’s ability to manage a portfolio of properties and to evaluate market conditions, the higher the ICR of the overall property portfolio the better.

Please note that data for the following article has been collected from the following official UK Government ONS sources (Office for National Statistics) and is valid up until March 2024:

  1. For House Prices:


  1. For Monthly Rental Rates:


We have assumed a typical BTL mortgage of 75% loan to value with an annual interest cost of 5% which has allowed us to outline certain areas with high potential ICR coverage.

Disclaimer: This article is an example of illustrative research and should not be relied on as a fact or a recommendation to purchase a rental property in a certain location. The aim of this information piece was to explain the ICR ratio and how it can be used by property investors and is an important calculation used by lenders when assessing mortgage applications.

UK Regions with the Best ICR for Buy-To-Let Mortgages

Before we begin listing the top areas in Scotland, Wales, and London for rental properties, let’s take a quick look at the ICR percentage for all the regions/countries in the UK.

Scotland: Best Places To Invest for Buy-To-Let Properties

Now, let’s discuss Scotland, arguably one of the best places to buy BTL properties. 

Scotland has some locations with the highest ICR in the UK, such as West Dunbartonshire, which makes it an attractive location for investing in BTL properties.

It’s important to mention that Scotland traditionally has had lower property prices and rents than many other parts of England. There are multiple reasons for this, foremost among them that Scotland’s economy is much smaller than England’s.

Scotland’s GDP and wage rates are also lower, which means residents here cannot afford the high property prices and rents as in the rest of England. The population density is also lower, leading to less competition for rental properties.

Another aspect to consider for this lower property pricing is the regulations of the local authorities. Housing policies in Scotland differ from those in England, which also influence the property markets.

Overall, Scotland is one of the best locations to consider if you’re looking for a stable property market with predictable prices and stable rental income by looking at the data we have collated.

Now, let us look at the top three locations in Scotland for BTL properties using ICR calculations. We’ll assess each location across multiple data points, such as average house price, average monthly rent, 75% LTV (as this is a typical BTL Mortgage), yearly interest cost at 5%, and then from this the ICR percentage. 

Scotland Best Places To Invest for Buy-To-Let Properties

1. West Dunbartonshire

West Dunbartonshire properties are more affordable than comparable properties in major cities such as Glasgow and Edinburgh, making it a low-barrier market.

Rental demand is also high because many students attend universities like the University of Strathclyde.

The area is also well-connected with Glasgow, and the quality of life here is excellent. It offers access to natural landscapes, including Loch Lomond and The Trossachs National Park. 

Some of the top areas in the region where you can invest in BTL properties are:

2. North Lanarkshire

North Lanarkshire in central Scotland has multiple advantages as a BTL property hotspot. Its affordable property prices and connections to major road networks such as M8, M73 and M74 make it an attractive location.

The spot has a high rental demand due to multiple businesses in the area. It also attracts a steady influx of students from nearby universities, such as Glasgow Caledonian University, who contribute to the rental population.

Add to that good employment opportunities, a thriving economy and good infrastructure, and you’ve got the perfect location for investing in BTL properties.

Some of the top areas in the region where you can invest in BTL properties are:

3. South Lanarkshire

South Lanarkshire is a prime location for BTL properties because of its proximity to Glasgow. Connected to the M8, M74, and railway networks, this location is preferable for people who work in Glasgow but prefer to reside in a quieter, nearby place.

The area also has a good economy and all modern amenities, making the rental yield attractive. If you’re looking for a stable location to invest in, South Lanarkshire may fit the bill.

Some of the top areas in the region where you can invest in BTL properties are:

London: Best Places To Invest for Buy-To-Let Properties

Now that we’ve covered Scotland let’s examine London and assess its performance as a BTL destination. 

London has a high rental demand and population density, and the younger generation prefers renting over buying.

London also has clearly laid down property laws, making dispute resolution easier. This is another reason why renters and landlords are attracted to the place. 

Moreover, historically, London has shown a good appreciation for property prices. This makes the location all the more attractive for potential landlords. 

Finally, London is well connected with educational centres such as Cambridge and Oxford, which attract the younger population. 

Add to that a robust property market with high rental yields, and you’ve got all the ingredients for a sound BTL investment. 

Let’s now quickly look at the top three locations in London where you can consider buying BTL properties.

London Best Places To Invest for Buy-To-Let Properties

1. Tower Hamlets

Tower Hamlets is one of the prime locations in London and is well-connected to business districts via the tube, bus, and DLR services. Important locations nearby are Canary Wharf, Mile End, and Bethnal Green. 

Due to its position, this location attracts a heavy flow of working professionals looking for accommodation. It also has a vibrant cultural aspect, with pubs, restaurants and parks (such as Victoria Park). 

Tower Hamlets is also close to educational centres such as the University of East London, which makes it attractive for students. 

Given that the area has historically shown a steady appreciation in property prices, you can’t go wrong investing here.

Some of the top areas in the region where you can invest in BTL properties are:

2. Southwark

Southwark’s central location beside the Thames provides smooth transportation links to the business district, local attractions, and important stations such as the London Bridge Station. The connectivity factor alone makes it a prime location for buying properties.

The location is also close to King’s College London and South Bank University, so you can tap into the student population looking for rental accommodation. The area has also undergone major developments recently, resulting in price appreciation.

It boasts a variety of property types, such as modern apartments and Victorian properties. These diverse property types help cater to different segments of the rental crowd.

Some of the top areas in the region where you can invest in BTL properties are:

3. Barking and Dagenham

The first aspect that catches your eye about property in Barking and Dagenham is the price, which is much more affordable than in other regions of London. 

This lowers the entry barrier for landlords who want to buy property in the area. Further, the borough has become attractive to investors and residents due to recent regeneration efforts.

It’s well connected by underground and overground transport, attracting young professionals looking for affordable accommodation near the business district. Its vibrant community also makes it a suitable residential location.

Some of the top areas in the region where you can invest in BTL properties are:

Wales: Best Places To Invest for Buy-To-Let Properties

Next, let’s explore Wales, which again offers affordable housing compared to many other locations in the UK. 

A variety of properties are available here, and strong rental demand ensures higher rental yields.

In recent times, Wales has seen many development activities, especially in cities such as Swansea, Cardiff and Newport. It’s also a tourist hotspot, making it attractive for short-term rental investments.

Then, there’s the usual combination of well-connected transport and proximity to university cities, which makes it a prime location for real estate investment. The local government also has several assistive schemes for investors and developers to encourage regional development.

Next, let’s take a look at the top three locations in Wales where you can consider investing in BTL properties.

Wales: Best Places To Invest for Buy-To-Let Properties

1. Merthyr Tydfil

Low property prices and high rental demand make Merthyr Tydfil an attractive investment destination for BTL properties. It’s also connected to roads like the M4 and A470, ensuring smooth transportation access.

This town also has many historical attractions, such as Cyfarthfa Castle, which helps to attract tourists and enhance seasonal rentals. Overall, Merthyr Tydfil is a prime location for investing in BTL properties.

 Some of the top areas in the region where you can invest in BTL properties are:

2. Blaenau Gwent

Located in South Wales, Blaenau Gwent also offers an affordable variety of properties that attract tenants from different walks of life. 

It also has an excellent road transport connection, making the location suitable for professionals who commute to work easily.

The location is being developed steadily, and the lifestyle combines the rural and urban. Add a scenic landscape and strategic location, and you have an up-and-coming spot for investing.

Some of the top areas in the region where you can invest in BTL properties are:

3. Rhondda Cynon Taf

Another affordable and well-connected location, Rhondda Cynon Taf offers all the benefits for a BTL property you may desire. 

Ongoing development, scenic beauty and access to modern amenities make it a suitable location for BTL investment.

Some of the top areas in the region where you can invest in BTL properties are:

10 Best Local Authorities for Buy-To-Let Investment in The UK

The local authorities of a region play a vital role in determining the place’s investment potential. 

We’ve analysed all local authorities across the UK, and the following are the top 10 local authorities that exhibit suitable conditions for BTL investments.

1. West Dunbartonshire, Scotland (193%)

Its proximity to Glasgow, easy transport links to all parts of Scotland and a diverse rental market with high demand make West Dunbartonshire one of the prime locations for BTL property purchase with a high ICR.

2. North Lanarkshire, Scotland (174%)

North Lanarkshire boasts convenient commuting options, lower property prices, and high rental demand, all adding to its attractiveness as a BTL destination. Several infrastructure projects have also increased the area’s value.

3. Burnley, North West (166%)

Burnley’s steady rental demand and low property prices contribute to its high ICR. The presence of nearby cities like Leeds and Manchester increases its value from the tenants’ perspective.

4. Newcastle upon Tyne, North East (164%)

Newcastle upon Tyne has the advantage of a booming economy supported by business locations, hospitals and universities. It has affordable property prices and ongoing regeneration projects in multiple locations, including Ouseburn and Quayside, which enhance its appeal as a BTL hotspot.

5. Portsmouth, South East (162%)

Due to the presence of a naval base, Portsmouth offers a bustling economy that attracts professionals, military personnel and businesspersons alike. It also has a thriving student population that contributes to the demand for rental properties.

6. Merthyr Tydfil, Wales (162%)

Affordable property prices, scenic locales, and strong rental demand make Merthyr Tydfil a great BTL location in Wales. Its connectivity to major road networks and cities such as Cardiff further enhances the location’s value.

7. Manchester, North West (161%)

Manchester needs no introduction as a premier investment destination. Universities, business sectors and developmental projects drive strong rental demand here. Overall, Manchester provides enough scope for capital appreciation.

8. Tower Hamlets, London (158%)

Tower Hamlets in East London is known for its proximity to the London and Canary Wharf financial hubs. This borough has an affluent tenant population, developing areas like Docklands and Whitechapel, and great transportation facilities, all of which make it an excellent BTL destination. 

9. South Lanarkshire, Scotland (157%)

Due to its easy connectivity to Glasgow and Edinburgh, South Lanarkshire is a hotspot for commuters and students looking to travel to these cities. It also offers low property prices and a high rental demand, which helps to increase the rental yield.

10. Southampton, South East (149%)

Southampton has a large student population due to the presence of Solent University and the University of Southampton, which helps boost the rental demand. 

Development projects like the Southampton Waterfront and West Quay Watermark add to that value and make the location even more attractive for investment.

5 Local Authorities with the Least Favourable ICR for Buy-To-Let Investments in The UK

Now that we’ve looked at the top 10 local authorities in the UK with the best ICR let’s also take a quick peek at the worst 5 locations. This is essential so you don’t make the mistake of unknowingly investing in these areas and regretting it later.

Investing in these regions can reduce your property value due to lower rental income, a lack of developmental activities, and other factors. So, it’s best to be aware of these locations and avoid them.

5 Local Authorities with the Least Favourable ICR for Buy-To-Let Investments in The UK

1. Derbyshire Dales, East Midlands, (71%)

A small population, lack of employment, and low property price appreciation make Derbyshire Dales one of the worst locations to invest in BTL properties. Although there’s seasonal tourism in Matlock Bath and Bakewell, it’s certainly not enough to boost the low rental yield.

2. Rutland, East Midlands, (72%)

Rutland has a low rental yield due to low demand, and the ICR data reflects that. Since the local economy depends on agriculture and seasonal tourism, there’s limited growth potential here compared to other locations in the UK.

3. South Hams, South West, (73%)

South Hams is a seasonal tourist spot, and visitors peak during summer. As a result, rental demand is low for the rest of the year. Also, property prices here are very high, the economy is agriculture-reliant, and there’s limited development activity.

4. Powys, Wales, (74%)

Powys is a rural area with an agricultural economy, which makes the demand for rental properties relatively low. Further, it’s not well-connected to transport links and has limited potential for development. 

5. Cotswold, South West, (74%)

Cotswold is scenic, but the property prices here are very high. Also, the tourism here is seasonal, making the rental demand sporadic. All these factors make it a less attractive location for investing in BTL properties.

How To Choose The Right Buy-To-Let Property

So, we’ve discussed a lot about the good (and bad) locations to invest in BTL properties, but what factors should you look at when selecting the property in the first place? This section will share some tips and factors to consider when doing just that. Let’s begin.

1. Local Economy

The local economy is among the most critical factors when selecting a BTL property. Areas with a vibrant business district, employment opportunities, and year-round tourism are usually good choices.

Further, check if the area has educational institutions that attract students looking for rental accommodation.

2. High Employment Rates

Areas with high employment rates are usually good choices for buying BTL properties as they have high rental demand. Proximity to large cities is also beneficial, as professionals will look for locations near their workplaces for renting.

3. Growing Population

When selecting a location for BTL investment, it’s best to always go with one that has a rising population level. More people will translate to more demand for rental accommodation and higher rental yields.

4. Infrastructure and Amenities

The availability of infrastructure such as hospitals, schools, colleges, shopping centres, and proper transportation is essential to boosting the rental demand for a location. So, make sure you check these out before investing.

Overall, the more developed an area is, the better it is to invest in BTL properties. While prime locations like London might demand exorbitant property prices, growing areas nearby will be better choices.    

Frequently Asked Questions(FAQs)

Most lenders ask for a minimum ICR of 125% if you are a basic rate taxpayer, though some might require 140-150% if you are a higher or additional rate taxpayer to ensure the landlord can continue mortgage repayments. Any ICR over 150% is usually considered very good.

Areas with low ICRs can be good investments, provided there is scope for capital appreciation and future growth in rental yield potential. This largely depends on your risk appetite and personal finances. 

The LTV ratio affects buy-to-let mortgages in multiple ways. For starters, the lower the LTV, the lower your interest rates on most cases. Also, many lenders have minimum and maximum LTV limits that must be met for the loan to be approved.

The LTV ratio also determines your deposit amount; lower LTV means you need to put down a higher deposit, but this is often preferred as it means you’re borrowing less. This translates to lower interest payments overall. 

Apart from the ICR, the following are some factors you should consider before selecting a buy-to-let property.

  • Property location 
  • Capital appreciation potential
  • Property condition 
  • Maintenance costs
  • Local market economy
  • Legal regulations in the area


ICR is one of the most important metrics to gauge the viability of a buy-to-let investment, but it’s by no means the only factor to consider. At the end of the day, you need to couple ICR with local market conditions, growth potential, and property valuation to make a decision.

If this seems like an overwhelming amount of information, we recommend that you contact lending experts who can help you select the right property and maximise your returns.

George Rogers LendingLine
CeMAP & CERER Qualified Mortgage Adviser

I am CeMAP & CERER qualified mortgage adviser and have helped a number of clients realise their dreams when they thought it would not be possible. I’m skilled at getting mortgages sorted for people with a history of missed payments, CCJs, defaults, debt management programmes, IVAs and bankruptcies.

Related Articles

Leave a Comment

Are you looking for the best areas in the UK to mortgage a Buy-To-Let property? Well, you're in luck. We collected March 2024 data of housing index, property prices, and monthly rentals of different regions to calculate Income Coverage Ratio percentage. Let's find out how it can help you.
LendingLine Logo White 2

Get Your Free
Mortgage Quote

LendingLine is a mortgage information service and not a mortgage brokerage. We work by connecting you with an independent and specialised mortgage advisor who best fits your individual needs and requirements. By submitting the above information, you consent to a regulated broker calling you to discuss your mortgage situation.

Your Submission is Successful

Thank you for submitting your information. An advisor will be in touch with you by phone in the next 24/48 hours. If they can't get hold of you, they will try emailing. Please therefore look out for any calls/emails.

You can also chat with our mortgage advisors via WhatsApp.