According to their findings, the UK’s second largest city is home to the nation’s highest rental yields surrounding a university, making it the top of the list for anyone looking for a buy-to-let property in a student hub. In fact, both Aston University and Birmingham City University in outcode B4 share the same rental yield of 11.66%, with an average annual rental price of £15,672.
In order to calculate the rental yield surrounding each UK university, Urban used the local outcode to find the average house and rental prices of the area and divided the annual average rental cost by the average property price, giving the percentage of the rental yield of that outcode.
Every year, the same phenomenon occurs where thousands of students at each university are looking for accommodation during their studies, and this guide from Urban helps to give some insight on where to invest for the best return.
The best ten university buy-to-lets
Universities in Birmingham take the two top spots offering a good alternative to buying in some of the UK's more expensive cities. The lower than average house prices in Birmingham’s B4 (£134,388) offers a more affordable foot on the ladder and landlords can still collect £15,672 a year in rent. Going further north to Teeside University in Middlesbrough (TS1), the rental yield is the third highest at 10.73%.
LS2 in Leeds, where both the Leeds Art University and the University of Leeds are located, is home to a rental yield of 9.22%.
The University of Edinburgh in EH8 has the sixth highest rental yield at 8.61%, closely followed by Nottingham Trent University in NG1 with an 8.41% rental yield and Bangor University in LL57 with 8.1%.
There's a tight race for the ninth and tenth highest rental yield surrounding Edinburgh Napier University in EH11 at 7.65% and De Montfort University in Leicester LE1 at 7.55%.
The worst university buy-to-lets
It's no surprise that the lowest three areas for rental yield surrounding universities would be in Prime Central London. South Kensington’s Heythrop College in W8 has a 2.49% rental yield, making it the least profitable place in the UK for a buy-to-let property near a university in the UK.
Not far behind is the University of Westminster in London’s W1B, where the rental yield is a mere 2.67% and the Institute of Cancer Research in SW7 has only a slight edge of 2.7%.
Moving to Cambridge, the University of Cambridge in CB2 has a rental yield of 2.87%, while Anglia Ruskin University in CB1 sits at 2.92%. Despite the similar rental yield in both, CB2 has a higher annual rental average (£19,092), compared to £13,704 in CB1. The only northern university to make the lowest rental yield list is Leeds Trinity University in LS18 at 2.93%.
Next up is the University of Bristol in BS8 (3%), Saint Mary's University Twickenham in TW1 (3.05%), Buckinghamshire New University in HP11 (3.17%), and finally, the University of Buckingham in MK18 (3.2%).
Adam Male, founder of Urban.co.uk, had this to say: “The buy-to-let market will always be a profitable business close to the nation’s university campuses despite the impositions that have been forced on the buy-to-let market of late, as thousands of students are in desperate need for accommodation every year.
For those looking to get on the rental ladder, looking to invest near a university guarantees an annual income and one that is often footed by the Government via student loans. While it does have its negatives and can result in higher upkeep costs, investing near to one of these universities can make a great sense financially.
Although the housing market is stronger in London and the South East in terms of actual prices, the Midlands and further north provides a much more attractive proposition in terms of rental yields and these areas are also home to some of the UK’s top universities. These are the sort of factors that buy-to-let landlords need to consider in the current landscape when looking to invest.”
