Postcodes around the universities of Southampton and Nottingham are among the most affordable for landlords looking to invest in student rental properties, offering high returns, new research shows.
UniHomes, a student accommodation platform, has analysed market data on the UK’s 50 largest universities to find out which universities offer the most profitable buy-to-let investments based on the current average rental yield in each university postcode.
It turns out that the University of Southampton is currently the UK’s best buy-to-let university. The area with the postcode SO17 has an average house price of £226,489 ($308,039), while the current average rent is £1,388 per month.
As a result, a buy-to-let property in the university postcode area currently offers an average rental yield of 7.4%.
Nottingham is the second best choice for a profitable investment in the buy-to-let sector. The University of Nottingham’s NG7 postcode has an average rental yield of 7%, while Nottingham Trent’s NG1 postcode is slightly lower at 6.7%.
The NE1 postcode, home to Newcastle University, also ranks in the top five with an average return of 6.3%, along with the University of Dundee (6%).
The universities of Cardiff (5.9%), Leicester (5.9%), Strathclyde (5.8%), Kent (5.8%) and Warwick (5.7%) are also among the top ten buy-to-let universities.
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Phil Greaves, co-founder of UniHomes, noted that the profitability of the buy-to-let sector had been hit by changes in legislation, particularly the reduction of tax relief and an increase in stamp duty.
“As many have also been financially affected by the current pandemic, the rental income of many landlords has also deteriorated,” he said.
However, he said that “the student accommodation sector continues to provide consistent demand for many landlords, allowing them to avoid prolonged vacancies.”
“In addition, many students finance their living expenses through a student loan and therefore do not face the financial insecurity that many currently experience in the regular rental market,” he added.
SEE: What do stamp duty cuts mean for buyers and property prices?
