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Yields: North on top when it comes to university towns' buy to lets

There’s more evidence today that the largest buy to let investment yields are coming from the north of England and the Midlands rather than the south.

In a new league table of university town buy to let yields, Durham hits the top spot with a typical yield of 11.5 per cent followed by Warwick on 10.3 per cent and Manchester at 8.5 per cent. 

Simple Landlords compiled the research by comparing the rental price advertised for student houses on popular roads with the estimated property values for 20 of the UK’s top universities. 

However, the company’s research also discovered that only just over one fifth of landlords are willing to let to students. 

The remaining 79 per cent haven’t or wouldn’t consider renting to students - with the majority preferring to play it safe by only renting to professional working tenants. 

But the research shows that student properties can command significantly higher rent than their estimated market value. 

Rental value estimates from property website Zoopla for similar properties on the same street as the student houses were lower than the price advertised specifically to student tenants for 17 out of 20 towns.

A four bedroom house listed for rent in Chailey Road, Brighton, for instance, was marketed for students of Sussex and Brighton universities for £2,200 per month, giving an estimated yield of 8.2 per cent based on sold prices of four bedroom houses on the same street. But renting a four bedroom house to tenants in an open market would command an average yield of just £1,325 or a 4.9 per cent yield. 

Tom Cooper, director of underwriting from Simple Landlords Insurance, says: “There are some great investment opportunities for the minority of landlords who are prepared to rent to the student market. 

“It’s not as risky a move as you might think. Often students don’t deserve their bad reputation. With university fees today’s students take their studies much more seriously, and many also work to see themselves through the semester. It’s not quite the hard-partying picture many have of student life.” 

The company has recently increased its discount on landlord insurance for properties let to students on the back of analysis carried out by its underwriters.

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