Top 10 student buy-to-let hotspots

Student property remains one of the most lucrative investments available to landlords, with sky-high yields of almost 12% currently on offer.

With students heading back to university over the next few weeks, demand for student housing is currently high, but where can buy-to-let landlords investing in the student property sector achieve the highest yields?

New research from online letting agent Urban.co.uk highlights which UK universities offer the best rental yield surrounding the campus.

According to the study, Birmingham has the best return for price of the property compared to rental prices.

The UK’s second largest city is home to both Aston University and Birmingham City University in outcode B4, which share the same rental yield of 11.66%, with an average annual rental price of £15,672. 

Teeside University in Middlesbrough (TS1) offers the third highest rental yield at an average of 10.73%.

LS2 in Leeds, where both the Leeds Art University and the University of Leeds are located, is home to a rental yield of 9.22%.

The University of Edinburgh in EH8 has the sixth highest rental yield at 8.61%, closely followed by Nottingham Trent University in NG1 with an 8.41% rental yield and Bangor University in LL57 with 8.1%.

Buy-to-let landlords can expect a rental yield of 7.65% near Edinburgh Napier University in EH11 and 7.55% when investing in property surrounding De Montfort University in Leicester LE1.

In order to calculate the rental yield surrounding each UK university, Urban used the local outcode to find the average property and rental prices of the area and divided the annual average rental cost by the average property price, giving the percentage of the rental yield of that outcode.

The research also identified the worst university buy-to-lets in terms of rental yields.

Unsurprisingly, the lowest three areas for rental yield surrounding universities are all in prime central London.

South Kensington’s Heythrop College in W8 has a 2.49% rental yield, making it the least profitable place in the UK for a buy-to-let property near a university in the UK, excluding capital growth.

The average rental yield near the University of Westminster in London’s W1B is just 2.67% and the Institute of Cancer Research in SW7 has only a slight edge of 2.7%.

Properties near the University of Cambridge in CB2 have an average rental yield of 2.87%, while Anglia Ruskin University in CB1 sits at 2.92%. Despite the similar rental yield in both, CB2 has a higher annual rental average (£19,092), compared to £13,704 in CB1.

The only northern university to make the lowest rental yield list is Leeds Trinity University in LS18 at 2.93%.

Adam Male, founder of Urban.co.uk, commented: “The buy-to-let market will always be a profitable business close to the nation’s university campuses despite the impositions that have been forced on the buy-to-let market of late, as thousands of students are in desperate need for accommodation every year.

“For those looking to get on the rental ladder, looking to invest near a university guarantees an annual income and one that is often footed by the Government via student loans. While it does have its negatives and can result in higher upkeep costs, investing near to one of these universities can make a great sense financially.

“Although the housing market is stronger in London and the South East in terms of actual prices, the Midlands and further north provides a much more attractive proposition in terms of rental yields and these areas are also home to some of the UK’s top universities. These are the sort of factors that buy-to-let landlords need to consider in the current landscape when looking to invest.” 

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