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Stoke, Liverpool and Edinburgh offer strongest student rental yield for landlords
Landlords looking for the best rental yields for student accommodation should look at Stoke, Liverpool and Edinburgh, research has shown.
According to an analysis from Paragon Bank, Stoke topped the student rental yield chart with an average rental yield of 9.43%. This is based on an annual rental income of £13,680 and an average property valuation of £146,944.
Liverpool had the second-highest student rental yield at 8.93%, which assumes an annual rental income of £26,409 and average property valuation of £295,722.
Edinburgh took the third slot with a student rental yield of 8.23%, according to an annual rental income of £32,789 and average property valuation of £398,320.
The top five was rounded out by York, Coventry and Cardiff, with student rental yields of 8.12%, 8.08% and 7.94%.
The report stated that property in student postcodes across the UK had an average rental yield of 7.04%, which is a rise from 6.12% two years ago.
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Paragon said that Russell Group universities, which comprise 24 universities, ranked highly on rental yield, with 13 making up the top 15 university towns and cities.
Louisa Sedgwick (pictured), Paragon Bank’s managing director of mortgages, said: “Student property remains a popular choice for portfolio landlords because they can typically achieve higher yields than standard buy-to-let property. They also benefit from parental guarantees, so arrears are typically lower.”
She added: “The stronger-performing locations based on our lending data shows that there’s a gravitation towards quality universities, with 13 of the top 15 locations boasting a Russell Group institution.”
Neil Smith, Paragon Bank’s head of surveyors, added: “Portfolio landlords usually have in-depth knowledge of local student markets to the point where they know the prime local areas and even the favoured roads that provide a strong sustainable student rental demand. With demand for university places forecast to rise over the next few years, there will be greater need for student accommodation.
“Some of this will be met by PBSA, but the traditional student property provided by private landlords will remain very much part of the mix.”