Analysis from Paragon found that landlords in Stoke achieved an average yield of 9.42%, slightly down from 9.43% last year.
Stoke, where Staffordshire and Keele universities are located, has an average annual rental income of £14,222 and property value of £150,982.
The city is closely followed by Plymouth, with an average yield of 9.27%. Plymouth attracts an average rental income of £35,224 and property valuation of £379,881.
Paragon’s data showed Liverpool fell from second to third place for the highest yields, at 8.85%.
Other locations that generate a high yield include Southsea at 8.31%, Edinburgh at 8.23% and Cardiff at 8.22%.
Aldermore Insights with Jon Cooper: Edition 9 – Why lending strategy is becoming more central in buy to let
Sponsored by Aldermore
Landlords in Birmingham generate the lowest average rental yield, at 6.8%. In the city, the average rental income was £36,042 and the typical property valuation was £530,366.
Across the UK, university student postcodes generated an average yield of 7.39% in June, up from 6.63% two years ago. Paragon said this outperformed non-student postcodes, which averaged 6.85%.
The lender’s data showed that Russell Group universities also performed well, with 13 of the 24 universities located in the top 20 yielding towns and cities. Paragon added that smaller and newer universities could also generate good returns, with four non-Russell Group universities in the top 10 locations.
Louisa Sedgwick, director of mortgages at Paragon Bank, said: “With universities about to commence the new academic year, these figures highlight the enduring strength of the student rental market. University towns like Stoke and Plymouth offer landlords a compelling combination of affordability and strong rental demand.
“While Russell Group universities often anchor strong rental markets, our data shows that high yields are not exclusive to these institutions. Landlords should look beyond the traditional powerhouses and consider emerging university towns where property prices are lower but rental demand remains high.”
| Town/city | Average rental income | Average valuation | Rental ratio |
| Stoke-on-Trent | £14,222 | £150,982 | 9.42% |
| Plymouth | £35,224 | £379,881 | 9.27% |
| Liverpool | £26,299 | £297,309 | 8.85% |
| Southsea (Portsmouth) | £39,215 | £472,121 | 8.31% |
| Edinburgh | £32,789 | £398,320 | 8.23% |
| Cardiff | £31,804 | £387,052 | 8.22% |
| Coventry | £28,952 | £354,858 | 8.16% |
| York | £39,360 | £484,958 | 8.12% |
| Leeds | £38,868 | £485,464 | 8.01% |
| Nottingham | £30,702 | £385,185 | 7.97% |
| Loughborough | £27,725 | £353,552 | 7.84% |
| Sheffield | £26,866 | £342,659 | 7.84% |
| Durham | £36,452 | £469,359 | 7.77% |
| Exeter | £44,659 | £579,036 | 7.71% |
| Southampton | £29,178 | £380,648 | 7.67% |
| Bristol | £42,515 | £565,756 | 7.51% |
| Newcastle upon Tyne | £36,882 | £498,617 | 7.4% |
| Manchester | £30,356 | £412,881 | 7.35% |
| Bath | £40,988 | £567,386 | 7.22% |
| Birmingham | £36,042 | £530,366 | 6.8% |
