Top universities offer mixed bag for BTL investors

by: Heather Greig-Smith
  • 16/05/2017
  • 0
Top universities offer mixed bag for BTL investors
Landlords with properties near the country’s top ten performing universities could earn rental yields of up to 5.22%.

Online estate agent StudentTenant.com said high demand for spaces at the top universities, means landlords in top performing areas can rely on filling their rooms. Some of the UK’s most prestigious and highly ranking universities can receive up to five applications per place, forcing them to turn away nearly 80% of applicants.

However, not all top universities are a good bet for investors.

Out of the top 10 ranking universities, Durham (pictured) is among the cheapest places to invest; averaging £151,465 for a four bedroom property and rental yields of 5.22%. Durham University ranked sixth in this year’s University League Table.

Warwick, which has a student population of 25,000, ranks second when it comes to rental yields, and is eighth in the academic league table. Average four bedroom property prices in the area are among the highest in the UK at £338,220, but landlords can expect rental yields of 5.11%.

Loughborough – tenth in the University League Table – has the third best yield, with landlords expecting rental yields of 5%.

Meanwhile, the top performing universities are less attractive from a property perspective. While the University of Cambridge ranks first in University League Tables, it is seventh in the top 10 for rental yields, with yields of 3.64%. Second placed Oxford offers yields of 4.12%, and London is the worst performing location for buy-to-let student landlords, with rental yields of 3.46%, and high property prices.

Danielle Cullen, managing director at StudentTenant.com, said rental yields are important but are not enough on their own.

“There are many things to consider before purchasing a student rental property. Is the property located near the university? Does the property have parking spaces? What is the current condition of the property? It’s important to collect as much information before taking the plunge, to ensure you get the best possible deal.”

She added: “Looking just at rental yields for the top ten ranking universities, it might seem attractive to invest in a student property in an area like Warwick or Loughborough where yields are around 5%. However, when you account for the higher property prices, it might not be the best option available for investors.

“Durham could well be an up and coming investment location for the student sector. It’s typically not what I would consider a ‘hotspot’ for private landlords looking to increase their portfolio, but could be one to watch.”

Table of The Top 10 Performing Universities (per University League Tables 2018), including: Total Student Population, Average Four Bedroom Property Prices, and Average Rental Yields.

Rental Yield Rank

Location

University

League Table Rank

Student Population

Avg. Property Price

Avg. Rental Yield

1

Durham

Durham University

6

17,927

£151,465

5.22%

2

Warwick

University of Warwick

8

25,615

£338,220

5.11%

3

Loughborough

Loughborough University

10

16,500

£237,005

4.93%

4

Fife

University of St Andrews

3

8,790

£158,113

4.60%

5

Lancaster

Lancaster University

9

13,336

£148,268

4.46%

6

Oxford

University of Oxford

2

22,602

£497,603

4.12%

7

Cambridge

University of Cambridge

1

19,672

£465,588

3.64%

8

London

Imperial College London

5

14,700+

£717,217

4.53%

9

London

London School of Economics

4

8,895

£1,125,671

3.46%

10

London

University College London

7

38,000+

£1,125,671

3.46%

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