Northern England offers best student rental yields

According to the latest buy-to-let index from online agent StudentTenant.com, half of the top 20 buy-to-let university towns were in the north of England, with Manchester (6.73%) dominating the league.

The metropolitan borough of Greater Manchester, Salford, came second, offering buy-to-let investors a respectable student rental yield of 6.68%. Portsmouth, home to Portsmouth University, came in third place, posting an average yield of 5.75%.

While a number of cities across the UK had experienced growth in average yields between October and December last year, two of the biggest three areas to show improvement were, again, in the north: Hull – home to the University of Hull – experienced the greatest average yield increase of 0.31%, while Rotherham came in third at 0.28%. Luton – home to the University of Bedfordshire –  saw an increase of 0.31%.

The research also found that cities hosting the best UK universities were not necessarily the best locations for buy-to-let investors. Despite being home to the fourth best university in the world, Cambridge posted the worst average rental return at a measly 2.7%. Oxford, host to the current number one university, saw an average rental yield of just 3.9%.

Meanwhile, Chester was found to be the second worst investment opportunity for buy-to-let investors with an average rental yield of a 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 at 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, making it the fourth worst place to invest for student rental yield in the UK.

Managing director Danielle Cullen said: “It’s really interesting to see that the cities that contain the ‘best’ universities actually offer the worst yields.

“Yields aren’t everything [a landlord] needs to know, however. There are a lot of other factors [to] 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.”