Landlords wanting to make a healthy return from their investment should target student properties in the North of England and Scotland, according to new research.
An analysis by peer-to-peer lending platform easyMoney, assessing the top 100 rated universities, uses average prices and rents to build a picture of where the strongest returns are.
The results found that areas around the University of Sunderland, Liverpool John Moores University and the University of Leeds offer the best returns in England, with the University of Aberdeen and the University of Dundee also proving very profitable north of the border.
Overall – and unsurprisingly – landlords can turn a better profit closer to Britain’s universities than not, as yields in postcodes home to a university stand at 5.4 per cent, compared to 5.2 per cent country-wide. However, many university postcodes offer far higher yields to investors.
The University of Sunderland has the highest average yield, at 10.1 per cent. Modest property values mean there’s a low barrier to entry in the city, with an average price of £79,830 versus a typical rent of £672.
The second most profitable area is around the University of Aberdeen in Scotland, with an average yield of 9.3 per cent. The University of Dundee is also a good investment spot, at 8.8 per cent. These are two very different markets however, with Aberdeen having a low average house price of £95,646, with Dundee costing far more, with a typical price of £170,695.
The third and fourth best locations surround Liverpool John Moores University, with a yield of 8.9 per cent, and the University of Leeds, at 8.8 per cent.
Yields are steady – if unspectacular – surrounding the UK’s big two universities. At the University of Cambridge yields are at 4.6 per cent, slightly surpassing yields at the University of Oxford, where they stand 4.0 per cent.
High house prices in London are a significant roadblock that majorly cut into landlord returns. Around Imperial College London you’d have to shell out over £2m to buy property. While renting is expensive in the area at £4,745 per month, that results in a yield of just 2.8 per cent.
The worst returns are near the University of Worcester, with yields of just 2.7 per cent. In the area house prices of £340,835 compare to average rents of just £776. Considering that’s just £100 more than in Sunderland, and house prices are more than four times higher, you can see why investors should look elsewhere.
Other regions outside London investors should avoid are around Aberystwyth University in Wales, with yields of 3.1 per cent, Ormskirk in Lancashire, near Edge Hill University, at 3.3 per cent, and around Loughborough University, with yields of 3.6 per cent.
