Which UK city is currently a gold mine for landlords letting to students?

by Jason McClean

11:44 AM, 16th September 2015
About 3 years ago

Which UK city is currently a gold mine for landlords letting to students?

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Which UK city is currently a gold mine for landlords letting to students?

The most profitable city for landlords letting homes out to students in England is Coventry, according to new research.gold

In Coventry, the rental yield is 6.03%, with landlords able to make an average of £1,780 from students in a typical four bedroom house.

Second on the list was Warwick, where investors are also currently able to get great returns from buying up properties near universities and letting them out to students.

The rental yield in Warwick is 4.78% and landlords can expect average returns of £1,924 per month from students in four bedroom properties.

The figures have been revealed by property website Zoopla, which looked at the percentage of their investment landlords could expect to see returned over the space of 12 months.

Coventry’s position at the top of the list is thought to have been influenced significantly by an increased demand for student accommodation in the city as a result of being home to two universities.

A spokesperson for Discount Insurance said: “Landlords are able to increase rents in city centres, particularly close to university campuses as students compete with one another to secure the most convenient living spaces.”

Coventry and Warwick are extremely profitable locations for private landlords because of a combination of high demand and relatively low house prices.

Top five most profitable English cities for student landlords:
1. Coventry – £1,780- 6.03% rental yield
2. Warwick – £1,924 – 4.78% rental yield
3. Chichester – £1,891 – 4.73% rental yield
4. Oxford – £2,148 – 4.61% rental yield
5. Bolton – £1,140 – 4.58% rental yield

Areas in northern England did not prove as profitable with renting to students in Middlesbrough meaning a yield of only 1.47% – less than a quarter as profitable as Coventry.

Investors in Lancaster would have a rental yield of 1.87%, while Lincoln offered a 2.14% yield.

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Comments

Dan Trivedi

20:20 PM, 16th September 2015
About 3 years ago

Jason - it's a great question to ask & great to see you've done your home work on getting the facts and figures. Remember average infomation can been cut in many forms, head line numbers look good... But what's important with student lets is actually ROI & structure. I live within 1 mile of all my students lets, that's not helpful because I manage the properties far from it, it's helpful because I live and breathe the property market around it. For me yields are important, but not as important as my cash margin..... If a 4 bed student house rents for £1400. But has a PP of £140k leveraging the correct BTL mortgage my investment could be as low as £30k. Giving me a gross profit pcm of around £850. That would give me a ROI of 34%..... a big drain on cash is the maintenance, now most of this is caused by the students but for SOME Lettings agents (not all) the easy route is to get the landlord to fork the bill which eats into the ROI. Get the right management on board, do it your self or leverage someone else's experince & resource

leon mepham

11:42 AM, 17th September 2015
About 3 years ago

I run a letting agency in Brighton and nearly all our our student landlords achieve rental yeilds of over 6%, some achieve over 12%. I'm quite supprised to see Brighton not feature in this top 5 with our two large universities. I'm not sure how sound Zoopla's data is here.

Annie Stevens

11:45 AM, 17th September 2015
About 3 years ago

By rental yield, are we simply referring to annual rent divided by property value? If so, my Glasgow portfolio of three houses and five flats has a lowest yield of 5.48% and a highest yield of 8%, on standard ASTs, not multi-lets. After standard management costs & insurance, but no voids or major repairs, this drops to 4.8% to 6.48%. Is this considered good? The best net yield is a house worth around 98K with rent at £580 per month and low management costs, and the second best is flats renting at 500 pcm, worth 75K, but higher management costs.

S Hays

11:57 AM, 17th September 2015
About 3 years ago

The figures in this article are daft. I'm getting 10% in Essex. Student lets are very hard work and not for everyone. I certainly wouldn't start a new one for less than 8%, it wouldn't be worth the time I put in.


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