Buy House in Luton: Reasons to Invest in Luton & Where to Buy

Luton, traditionally known for its rich industrial history and as the home to one of the UK’s major airports, is rapidly emerging as a property investment hotspot. 

Nestled just 30 miles north of London, this bustling town is capturing the attention of investors thanks to its unique blend of affordability, strategic location, and significant economic growth potential. With its transformation fueled by extensive regeneration projects and an expanding local economy, Luton presents a compelling case for both seasoned and novice investors looking to diversify their portfolios.

In this post, we will delve into the myriad reasons that make Luton an attractive option for property investment. 

From its exceptional connectivity to London and beyond, to the ambitious development plans set to reshape its skyline, we’ll explore what sets Luton apart in the competitive UK property market. 

Furthermore, we will guide you through the prime investment locations within the town, identifying areas that offer the best potential for capital appreciation and rental yields. Whether you’re drawn to the allure of up-and-coming neighborhoods or established investment hotspots, our insights will help you make informed decisions in your property investment journey in Luton.

Luton’s Property Market Overview

Luton’s property market has been experiencing a remarkable phase of growth and transformation, making it a focal point for investors looking for opportunities outside of London’s saturated market. Here’s a closer look at the current trends, growth rates compared to national averages, and the influence of infrastructure developments on property values in Luton.

Snapshot of Current Market Trends in Luton

Luton has seen a steady increase in property values over the past few years, with a particularly sharp uptick in demand for both residential and commercial properties. 

This surge is driven by a combination of factors, including Luton’s affordability relative to London, its growing economy, and the influx of professionals and families seeking better value for their money without compromising on connectivity to the capital. Rental demand has also been robust, buoyed by the town’s expanding student population and the increasing number of young professionals moving to the area.

Comparison of Luton’s Property Market Growth Rates to National Averages

When compared to national averages, Luton stands out for its impressive property market growth. 

While the UK has seen moderate growth rates in property values, Luton has outpaced many regions, showcasing above-average increases in both property prices and rental yields. This can be attributed to the town’s ongoing development projects, its strategic position near London, and its relative affordability, which have together created a hotbed for investment and development.

Discussion on the Impact of Recent Infrastructure Developments on Property Values

Recent and ongoing infrastructure developments in Luton have had a significant positive impact on property values. Key projects include the expansion of London Luton Airport, improvements to the local road and rail networks, and the development of commercial and residential spaces in the town center. These initiatives have not only enhanced Luton’s appeal as a place to live and work but have also made it more accessible to domestic and international visitors.

The airport’s expansion, in particular, has been a major catalyst for growth, attracting businesses and boosting employment opportunities in the area. This, in turn, has increased demand for housing, pushing up property values and rental rates. Similarly, enhancements to transport links have improved connectivity with London and other major cities, making Luton a more attractive option for commuters and investors alike.

1. Strong Economic Potential 

Luton sits at the heart of the Golden Triangle, formed by London and the university cities of Oxford and Cambridge. The town is ideally located to support impressive economic growth across a range of sectors like digital technology, sustainability, research and finance.

In 2016, Luton launched the Luton Investment Framework (LIF), a 20-year plan for the town’s transformation. So far, the LIF has secured a total of £4.5 billion for the local economy, improving the town by creating sustainable growth and making Luton a vibrant place to work and live.

The LIF alongside a number of other regeneration projects is already transforming the town. Examples of developments completed or underway include: 

• London Luton Airport – A redevelopment of £160m, set to create 10,000 jobs by 2030.
• LU20N – An award-winning scheme set to add 785 homes and 50,000 sq. ft. of retail space and with rental yield projections of up to 5%. The first phase was completed in November 2021.
• Luton DART (Direct Air-Rail Transit): Completed in 2022, this £225 million mass transit system connects Luton Airport with Luton Airport Parkway railway station.
• The Hat District – Restoring Luton’s former hat factories to create an iconic workspace in the Luton area.  The space encourages the growth of businesses and attracts artists, entrepreneurs and starts-ups to the town.
• Luton Town Football Club – The planned New Power Court Stadium is set to have 17,500 seats with the club due to move in by 2024. The stadium will be part of a larger regeneration of the Power Court site that includes new residential apartments, a hotel, retail space, and bars and restaurants. 

Luton has an extensive catchment area, with 23 million people based within 2 hours. With its proximity to the capital, Luton is fast becoming a business hub for enterprises in a variety of fields.

With house prices at a fraction of the cost of capital, while still being a 23-minute train ride to central London, investment property Luton is an attractive destination for a wide range of investors.

2. Strategic Location and Great for Business

Capitalising on the opportunity and growing popularity with commuters, over the years a number of business and technology hubs have sprung up in Luton:

• Butterfield Technology Park is an 85-acre parkland and the site of business and technology companies. The Park is set for further expansion, with construction starting on site for a new £20m industrial and office building due for completion in 2023.
• Capability Green is an established business park. Situated near Luton Airport, it offers great air, rail and road connectivity making it an attractive option for companies looking to establish a presence in the south of England.

Synonymous with vehicle manufacturing and high-precision engineering, many British and international firms in high-technology sectors including engineering, defence, pharmaceuticals and automotive call Luton home. Some of the companies with a major presence in Luton include:

• EasyJet
• First Choice
• LaPorte
• Monarch Airlines
• TUI Travel
• Yates’s

Luton is a pioneer in aviation-related tech and industry. London Luton Airport is one of the UK’s fastest-growing airports and one of Europe’s top five private aviation centres. A number of high-value aviation-focused tech, supply chain and engineering companies are making new markets for growth and sustainable supply chain investment.

With businesses and growth comes robust property prices, and as Luton continues to appeal to a wide range of enterprises, Luton property investment remains appealing.

3. An In-Demand Housing Market

How does buying a house in Luton rank in terms of a property investment destination? In recent years, Luton ranked as one of the most sought-after areas of the UK for buy-to-let investors and first-time buyers. 

Is Luton cheaper than London?

With London’s sky-high property prices, many first-time buyers are looking further afield. Luton regularly ranks within the top 5 commuter towns for Londoners. With a 26-minute journey into St Pancras International Station, Luton is one of the easiest and cheapest commuter towns. 

In 2022, the average house price Luton sat at £297,251, compared to London’s average of £523,666. According to research conducted by Lloyd’s Bank, professionals working in Central London can save close to half a million pounds by commuting up to an hour each day from commuter towns instead of renting homes in London. Luton offers one of the cheapest commutes with trains costing £11.20 with an annual railcard.

In the year prior to January 2023, Luton properties grew in value by 11.3% . Over the same period, the average sale price of property in Luton rose by £29,000. In 2022, first-time buyers in Luton spent £254,000 on their property on average, an increase of £26,000 compared to a year prior. 

How do Property Prices in Luton Compare to the East of England?

Compared to the average price of a property in the East of England, which is £365,000 (November 2022), buyers in Luton paid 20.5% less for their property. The most expensive properties in the East of England were in St Albans, with an average price of £620,000, more than twice that of Luton. 

4. Rental Demand for property in Luton is on the Rise

Another appealing aspect of investment property Luton is the fact that the town is experiencing a housing shortage. Post-pandemic many landlords sold their rental properties to cash in on sky-high property rates, this has left the town with a housing shortage pushing up rents. According to Home, average property rents in Luton are £1,449 per calendar month.

5. A Steady Student Rental Market

Home to the University of Bedfordshire, Luton’s student rental market presents property investors with the potential for strong returns. The student population includes around 20,000 students from over 100 countries.

The university is feeling the benefit of the town’s wider regeneration. The academic institution received £46 million investment in a state-of-the-art library and a £37 million STEM building which opened in 2019. 

Luton currently suffers from a student accommodation gap, and students are increasingly seeking quality private accommodation that can meet their needs. Luton’s student demographic makes investing in student rental property an appealing prospect.

6. Inbound Investment Makes Luton Increasingly Attractive 

Over the past decade, Luton has undergone a transformation and external investment continues to provide a boost to the town.

The town’s Cultural Quarter, located near the main railway station, was improved through a £3.9 million upgrade creating studios, art venues and theatre space. A 70-acre commercial area, New Century Park, is set to deliver 4,000 jobs and in Marsh Farm, a £25 million shopping centre is in the pipeline alongside regeneration work underway at the former Vauxhall car plant. Bartlett square is another development set to bring in 2,000 jobs while across the town mixed-use development schemes have been given the green light.

Is Luton Developing?

Investment in infrastructure projects continues to support Luton’s development. The town has attracted over £20 million of Levelling Up investment. Prior to the pandemic, the town’s economy was worth £6.3 billion per year and the town is investing in key sectors. These include aviation and transport as well as emerging sectors like the green economy and digital and creative industries.

The Luton 2023 – 2040 vision sets out a plan for sustainable growth to create 12,000 new jobs and an additional £1.6 billion of economic activity per year, while simultaneously making Luton a hub for green technology, research and finance. By 2028, new major developments will include the competition of Power Court Stadium, The Stage and Hat Gardens.

7. Luton’s Strategic Location

Luton’s strategic location and excellent connectivity are among the primary factors driving its appeal as a property investment destination. Positioned just 30 miles north of London, Luton offers a compelling blend of accessibility and affordability that is increasingly attracting investors, commuters, and professionals looking for viable alternatives to the capital’s high-cost living and investment environment.

Proximity to London and the Affordability Contrast

The proximity of Luton to London is a significant advantage for those working in the capital but seeking more affordable housing options. Property prices in Luton are considerably lower than those in London, providing an attractive proposition for both residents and investors. This affordability contrast has not only fueled demand for residential properties but also spurred interest in Luton’s commercial real estate, as businesses seek cost-effective locations near London.

The cost of living in Luton, combined with its closeness to the capital, means investors can expect a steady demand for rental properties, driven by tenants who work in London but prefer or need to live outside it. This dynamic creates a robust rental market, offering strong yields and the potential for capital growth as demand continues to rise.

Benefits of Transport Links, Including Luton Airport, Rail, and Road Networks

Luton’s transport infrastructure is a key asset, enhancing its connectivity to London, the rest of the UK, and even international destinations:

• Luton Airport: One of the UK’s largest airports, Luton Airport serves as a gateway to Europe and beyond, supporting the town’s economy and making it an attractive place to live for frequent travelers. The airport’s ongoing expansion plans are set to increase passenger capacity, further boosting Luton’s profile and property market.
• Rail Links: Luton is well-served by the Thameslink and East Midlands Railway services, providing fast and frequent trains to central London stations such as St Pancras International in under 30 minutes. This makes commuting a viable option for residents, enhancing the appeal of Luton as a residential base for London workers.
• Road Networks: The town benefits from excellent road connections, including proximity to the M1 motorway, facilitating easy access to London and the North. This connectivity supports not just the residential market but also commercial logistics and businesses looking to operate in a strategically located base.

Together, these transport links not only make Luton an accessible and attractive location for living and working but also play a crucial role in driving property investment returns. The ease of commuting to London, combined with international travel facilitated by Luton Airport, positions the town as a strategic choice for investors aiming to capitalize on both the residential and commercial property markets.

Which Areas of Luton Should Property Investors Consider?

Life in Luton means easy access to the best that London has to offer. The best but without the high housing price tag. 

As the town continues to grow and attract attention, identifying up-and-coming areas is key to making a strategic investment. Here’s a closer look at neighborhoods in Luton that offer significant investment potential and what makes them attractive to investors and renters alike.

The LU1, LU2, LU3, and LU4 postal codes represent different geographic areas within and around Luton, a large town in Bedfordshire, England. These codes are part of the UK’s postal system, managed by the Royal Mail, and are used to efficiently sort and deliver mail. Each postal code provides specific information about the geographic area it covers, helping to pinpoint locations for postal delivery, navigation, and identifying local services. 

Central Luton

LU1 is a key area for property investors and in the last year properties in the area had an average price of £295,601 –  7% down on the previous year and 2% down on the 2020 peak of £302,512.

There are plenty of new builds in Luton town centre, which also boasts superb transport links, with the capital just 24 minutes away and national rail connections to Leeds, Sheffield and a direct service to Gatwick and Brighton.

LU1 is also home to the University of Bedfordshire and presents investors with opportunities to target the student rental market. Shared student properties featuring a garden are in high demand from students.

The LU1 postal code primarily covers Luton town centre and its immediate surrounding areas, including parts of the Dallow Road area, Bury Park, and parts of the High Town area. It encompasses the central business district, shopping areas, and several residential neighborhoods close to the town center.

LU2

Properties in Luton area LU2 had an overall average price of £332,679 over the last year –  7% up on the previous year. LU2 is the site of Luton Airport, one of the area’s main employers. London Luton Airport is one of the capital’s five main airports. It is also the UK’s fifth busiest serving destinations across the UK and Europe.

This code extends to include areas to the north and east of Luton town center, such as Stopsley, Wigmore, and parts of High Town. It also covers the Luton Airport area, which adds a unique mix of residential and commercial properties, alongside the airport’s significant presence.

Properties in LU3

North Luton is a green and leafy area of the town including Lower Sundon, Streatley and Sundon. Housing tends to be semi-detached from the 1920s and 1930s, making the area ideal for families. Properties in LU3 had an overall average price of £315,532 in the last year – 9% up compared to one year previously.

 LU3 covers the northwestern parts of Luton, including areas like Leagrave, Limbury, and parts of Biscot. It is characterized by a mix of residential neighborhoods, with a significant amount of housing developments, schools, and local parks.

Properties in LU4

Luton’s LU4 area covers the west of the town, including Chalton and London Farm. The area is home to a number of listed buildings and borders the M1. Properties in LU4 had an overall average price of  £301,926 over the last year – 10% up on the previous year.

This postal code covers the western and southwestern parts of Luton, including areas like Challney, Lewsey Farm, and parts of Dunstable. LU4 is known for its residential estates, community amenities, and access to the M1 motorway, providing connectivity to other parts of the UK.

Up-and-Coming Areas

High Town

Known for its Victorian housing, vibrant community, and cultural diversity, High Town is experiencing a renaissance. Its proximity to the Luton town center and the mainline train station makes it a desirable location for commuters. The ongoing regeneration efforts and the development of creative and arts spaces are enhancing its appeal, particularly among young professionals and artists.

Biscot and Dallow Road Area

These areas are becoming increasingly popular due to their affordability and the significant investment in local amenities and infrastructure. The Biscot area, in particular, is seeing a surge in interest from investors, thanks to its spacious properties and potential for development. The addition of new shops, restaurants, and improvements to parks and public spaces are making it a more attractive place to live.

Biscot Area predominantly falls under the LU3 postal code. It is a residential area known for its diversity and range of housing options. Biscot is gaining popularity among investors for its potential for growth and its proximity to local amenities and the town center.

Dallow Road area overlaps between LU1 and LU4 postal codes and is close to the Luton town center. It’s characterized by its residential appeal and access to several parks and schools, making it a family-friendly option.

Round Green and Stopsley

These neighborhoods offer a more suburban feel, with plenty of green spaces and a strong sense of community. With excellent schools and local amenities, they are particularly appealing to families. The ongoing development of housing and local infrastructure, combined with their proximity to the airport and major transport links, positions them as smart choices for long-term investment.

Both Round Green and Stopsley are located within the LU2 postal code. Stopsley is further towards the northeast part of Luton, offering a more suburban feel with access to open spaces and good schools, making it attractive to families. Round Green is closer to the town center, offering a blend of residential convenience and accessibility.

Leagrave

This area is witnessing rapid growth, driven by its excellent transport links, including Leagrave train station, which offers direct access to London. The availability of affordable housing, alongside plans for new residential and commercial developments, makes it an attractive option for both investors looking for rental properties and first-time buyers.

Leagrave is primarily in the LU4 postal code area and is known for its excellent transport links, including the Leagrave train station with direct access to London. The area has a mix of residential properties and is witnessing growth, driven by its affordability and the development of new housing and amenities. Leagrave’s appeal is further enhanced by its proximity to several large parks and recreational areas.

Established Investment Hotspots

Luton’s property market is diverse, with several areas already recognized as reliable investment destinations. These established hotspots continue to attract investors due to their proven track record of growth and stability.

Wigmore and Stopsley

These areas are renowned for their peaceful, family-friendly environment and excellent local amenities, including parks, schools, and shopping facilities. Their consistent popularity has made them a staple choice for property investors looking for long-term growth and stable rental yields.

Wigmore is predominantly a residential area, prized for its quiet neighborhoods and quality housing. It is well-suited for families and professionals alike, offering a range of amenities including shops, schools, and parks. The area is also appreciated for its proximity to Luton Airport, making it convenient for those who travel frequently, yet it maintains a peaceful environment away from the flight path.

Stopsley stands out as a suburban area with a strong sense of community and a mix of housing types, from traditional semi-detached homes to modern apartments. Stopsley benefits from good schools, local shopping areas, and parks, making it a desirable location for families. It’s known for its green spaces and recreational facilities, adding to the quality of life for its residents.

Both Wigmore and Stopsley fall primarily under the LU2 postal code. This area is well-connected, offering easy access to the rest of Luton, surrounding areas, and London via the nearby Luton Airport Parkway railway station.

Bushmead and Barton Hills

Bushmead and Barton Hills are considered some of the more desirable areas to live in Luton, characterized by their modern development, scenic views, and family-friendly environments.

Their appeal is boosted by easy access to the countryside, appealing to renters and buyers who prioritize a balance between city and nature.

Bushmead is a relatively new development compared to other parts of Luton, offering a range of modern housing options. It is nestled against the backdrop of open countryside, providing a tranquil setting that is still within easy reach of Luton’s town center. The area is known for its well-planned layout, including green spaces and amenities that cater to a comfortable and convenient lifestyle.

Barton Hills is another sought-after residential area, featuring a collection of detached and semi-detached homes that are ideal for families. It is distinguished by its quality schools, local parks, and access to the Barton Hills National Nature Reserve, offering opportunities for outdoor activities and nature walks. Barton Hills provides a blend of suburban tranquility with the convenience of nearby shops and services.

Both Bushmead and Barton Hills are primarily located within the LU3 postal code. These areas are attractive for their blend of modern living, accessibility, and natural beauty, making them popular choices for homebuyers and investors seeking property in Luton’s more upscale neighborhoods.

Areas with High Rental Demand

In addition to established hotspots, Luton boasts areas with notably high rental demand, driven by various factors that make them attractive to renters.

Luton Town Centre

As the heartbeat of the town, the center is always in demand, especially among young professionals and those seeking the convenience of urban living. The area’s rental market is buoyed by easy access to shopping, entertainment, and employment opportunities.

Major employers in and around Luton Town Centre, including the expansion of Luton Airport and businesses within the town’s commercial districts, create a strong demand for rental properties from working professionals. The convenience of living near the workplace is a significant draw for this demographic, contributing to the high rental demand.

Nearby University of Bedfordshire 

Areas surrounding the University of Bedfordshire, such as Park Town and New Bedford Road, experience high rental demand from students and academic staff. These locations offer a steady rental market, with demand peaking around the academic year.

The constant influx of students each academic year ensures a continuous demand for rental properties, providing landlords with a relatively stable and predictable rental income. These areas are particularly attractive for investors specializing in student housing or looking for properties that cater to the academic community.

Properties in the vicinity of the University of Bedfordshire are highly sought after for rental investments due to the consistent demand for student housing. The area presents opportunities for investors looking to enter the student rental market, with options ranging from buy-to-let flats to houses in multiple occupation (HMOs). For students, living near the university and the town center offers convenience and a vibrant social scene, contributing to a positive university experience.

The primary driver of rental demand in Luton Town Centre and areas near the University of Bedfordshire is the unparalleled accessibility and convenience they offer. 

Tenants in these areas enjoy proximity to Luton’s main shopping, dining, and entertainment venues, as well as easy access to public transport services. This makes them especially appealing to young professionals and students who value the ability to live, work, and enjoy leisure activities without the need for extensive commuting.

Is Luton a Good Place to Invest?

Investing in property in Luton means capitalising on the opportunities of a commuter town. With effortless connections to London and property prices of around half of those in the capital, it’s not hard to see why Luton remains a popular place for a wide range of investors and buyers.

According to Aldermore’s buy-to-let city tracker, properties in Luton offer the best return for long-term investment, with house price growth over the past decade coming to more than 5.7% Luton takes the second spot with 5.9 percent average annual increase in house prices in the last 10 years, with Southend taking the top position and Bristol coming in third.

Are House Prices Going up in Luton?

As of January 22, 2024, the average price paid for properties in Luton is £321,000. 

This figure represents a fall of 14.0% over the last 12 months for sold prices in Luton​​. 

This decrease suggests that while Luton remains an attractive location for property investment due to its strategic location and ongoing development projects, the market has experienced a recent adjustment in property values. 

Investors and homebuyers looking into the Luton property market may find this a favorable time to consider purchases, given the lower average prices compared to the previous year.

Luton is a popular commuter town and popular with property investors due to its proximity to London and regeneration and investment that is making the town a more attractive place to live. To find out more about investment property Luton opportunities and where to buy, get in touch with us today.