orthern England University cities dominate profitable areas for buy-to-let investors in the UK, according to the latest buy-to-let index.
Research found that half of the top 20 best buy-to-let university towns are in the north of England. Manchester – home to the University of Manchester and Manchester Metropolitan University – offers buy-to-let landlords a potential rental yield of 6.73%, the best average return in the UK. In addition, the metropolitan borough of Greater Manchester, Salford, offers potential buy-to-let investors a very respectable student rental property yield of 6.68%.
Portsmouth, home to Portsmouth University, came in third place, posting a 5.75% average yield. Whilst Leeds, Cardiff and Coventry closely followed with average yields of 5.67%, 5.59% and 5.59% respectively.
Plenty of UK cities saw growth in average yields, with Hull - home to the University of Hull - experiencing the greatest average yield increase of 0.31%, closely followed by Luton - home to the University of Bedfordshire - with an increase of 0.31% and Rotherham at 0.28%.
Research also found that cities hosting the very best UK universities did not necessarily mean they were the best locations for buy-to-let investors. Despite being home to the fourth best university in the world, and boasting alumni such as Charle Darwin, Isaac Newton and Stephen Hawking, Cambridge actually posted the worst average rental yield return at a measly 2.7%. Oxford, host to the current number one university in the world, also followed the trend between low investment yields and high performing universities with an average rental yield of just 3.9%.
Chester was found to be the second worst investment opportunity for buy-to-let investment landlords. Home to the University of Chester, the city recorded an average rental yield of a mere 3.04%. Chelmsford, home of Anglia Ruskin University, followed closely behind with a low average yield of 3.07%, with Wolverhampton and Carlisle falling not far behind – 3.27% and 3.29% respectively.
Even London, home to King’s College London, London School of Economics and the University of London registered an underwhelming 3.25% average yield, ranking the fourth worst in the UK; just 3.25%.
Comment from Danielle Cullen, Managing Director at StudentTenant.com:
“For anyone looking into investing into student property, it’s important to assess the potential yields in the area. It’s really interesting to see that the cities that contain the “best” universities actually offer the worst yields, and just a little bit of research will uncover this for potential investors.
‘Yield’ is a bit of a buzzword for investors, but often a lot of people don’t actually know how to work them out, or how valuable knowing that information is. I would strongly advise spending a bit of time learning about the importance and how you can optimise them to ensure you get the best possible return on investment.
I would also express though that yields aren’t everything you need to know. There are a lot of other factors a landlord should consider before investing, such as proposed vacancy rates. For example, if the property will be vacant over the summer in a student let. Or, if it’s more attractive for a certain type of tenancy, such as short-term lets where there is likely to be a higher rate of vacancy, but perhaps the potential of higher rents.”