Where student landlords can earn the best yields

Where student landlords can earn the best yields

8:58 AM, 6th September 2022, About a month ago 1

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The British towns and cities where student landlords can earn the best yields have been revealed.

According to Paragon Bank, landlords letting to students can achieve the strongest yields in smaller single university towns and cities.

The bank has analysed mortgage applications for properties located in popular student postcodes – and found that student accommodation in towns or cities with just one university typically achieve the highest yields.

Top 10 yielding university towns and cities

The bank points out that eight of the top 10 yielding university towns and cities only boasted one main university, extending to 14 when considering the top 20 yielding locations.

Derby topped the yield list, with landlords generating an average yield of 8.67% in student postcodes.

The city’s main establishment is the University of Derby, which had 21,285 students during the 2020/21 academic year, according to the latest data available from the Higher Education Statistics Agency.

University of South Wales was second on the list

Pontypridd, home to a campus of the University of South Wales, was second on the list with a yield of 8.31%.

Here, the average property price was the lowest in the top 10, as well as the rental income, making it a cheaper option for landlords wishing to purchase property.

In third place is Hull, another small city with one university and where purchasing property also requires a lower initial outlay, £172,429 on average.

But landlords serving the University of Hull market also typically generate lower levels of average annual rental income, resulting in typical yields of 8.12%.

Looking at the top 10 locations for student yields reveals that only two – Liverpool and Coventry – have more than one main university.

Other locations on the list included Salford, Lincoln, Worcester, Plymouth and Durham.

‘Generating yields in the student buy-to-let market’

Richard Rowntree, the mortgages managing director for Paragon Bank, said: “Although major cities like London, Birmingham and Manchester often boast the largest student populations, they are not necessarily the best locations for generating yields in the student buy-to-let market.

“This is because such places are more likely to be home to purpose-built student accommodation and greater levels of competition, whereas smaller cities and towns have less competition from large-scale institutional investment.”

He added: “Something else we often see when looking at the best yielding student locations is relatively affordable property – the top five locations for yield have property valued below the national average of £278,000.

“Another common trend the top 10 yielding locations share is that they have smaller private rented sectors serving the student market.”

Top ten locations for student rental yields

Location Average Rental Income Average Valuation Rental Yield Universities (number of students)
Derby £23,544 £271,563 8.67% University of Derby (21,285)
Pontypridd £9,918 £119,321 8.31% University of South Wales (23,150)
Hull £14,005 £172,429 8.12% University of Hull (14,615)
Salford £17,228 £215,326 8.00% University of Salford (23,955)
Lincoln £16,163 £202,835 7.97% The University of Lincoln (17,565)
Worcester £26,368 £331,765 7.95% University of Worcester (10,110)
Liverpool £24,780 £314,589 7.88% University of Liverpool (29,185)
John Moores University (27,200)
Liverpool Hope University (5,685)
Plymouth £32,226 £417,905 7.71% University of Plymouth (18,905)
Coventry £27,868 £362,405 7.69% Warwick University (28,110)
Coventry University (39,145)
Durham £31,664 £420,441 7.53% Durham University (20,645)

 



Comments

Blodwyn

15:52 PM, 6th September 2022, About a month ago

Where do Brighton and Newcastle upon Tyne come? They both have 2 universities.

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