Landlord News

Northern cities still produce best student property yields

Em Morley - August 18, 2016

New research from property crowdfunding platform Property Partner has revealed that cities in the North of England still lead the way for student property rental yields.

Ahead of the new academic year, buy-to-let properties in Northern cities still come top of the class for potential returns.

Student success

Property Partner has constructed a list of 86 university towns and cities across Britain and Northern Ireland and ranked them in terms of rental yields expected in the local market.

Cities in the North East of England have seen A grades, with Sunderland topping the list with returns of 6.9%. Middlesbrough came next, with yields of 5.9%.

Birmingham took the third medal position, with Aston and Birmingham City University offering good demand for investors. Average house prices here stand at £116,732 per year, with expected yields 4.5%.

In Manchester, over 100,000 students are expected to descend on the city in September. All three Greater Manchester universities are the top-ten places for expected yields. What’s more, the city is experiencing substantial infrastructure projects and regeneration works in areas such as Salford and Deansgate, meaning an investment could prove very savvy in the long-term.

Capital Pains

However, it is a different story in London and the South East of England. Years of substantial house-price rises have moved to severely restrict buy-to-let yields.

Six of the bottom ten universities for rental yields are in London. Imperial College, located in Kensington and Chelsea, was found to be the lowest-yielding area surveyed, with yields of just 1.3%.

Dan Gandesha, CEO of Property Partner, noted, ‘in this era of ultra low rates and high market volatility, stable investments which provide a reliable income and medium to long-term capital growth prospects are the holy grail. Property is a total returns investment and until recently, it’s been a capital returns play.’[1]

Northern cities still produce best student property yields

Northern cities still produce best student property yields

‘But with Brexit, the rules of the game are changing. Now our investors are increasingly focussed on the reliable income they can earn, month after month. Property Partner enables anyone to invest in residential property all over the country, providing one-click access to grandparents, parents, and their college-age children, so they can take their view on the property market, wherever they study,’ Gandesha added.[1]

The top 20 university towns by average rental income by postcode were found to be:

University town Median Rent pcm Gross annual rent Average house price Average gross annual yield % Average net annual yield %
Sunderland £575 £6,900 £65,201 10.6 6.9
Teesside (Middlesbrough) £425 £5,100 £56,272 9.1 5.9
Aston + Birmingham City £676 £8,112 £116,732 6.9 4.5
Salford £750 £9,000 £131,863 6.8 4.4
Edinburgh £1,101 £13,212 £197,010 6.7 4.4
Manchester Metropolitan £895 £10,740 £160,315 6.7 4.4
Manchester £750 £9,000 £135,174 6.7 4.3
Newcastle + Northumbria £823 £9,876 £150,609 6.6 4.3
Nottingham + Nottingham Trent £794 £9,528 £151,535 6.3 4.1
Coventry £901 £10,812 £179,412 6.0 3.9
Bangor £750 £9,000 £156,173 5.8 3.7
Huddersfield £540 £6,480 £116,802 5.5 3.6
Portsmouth £925 £11,100 £201,434 5.5 3.6
Queen’s, Belfast £802 £9,624 £183,505 5.2 3.4
Edge Hill (Ormskirk) £1,040 £12,480 £239,298 5.2 3.4
Durham £650 £7,800 £151,438 5.2 3.3
Southampton £901 £10,812 £212,852 5.1 3.3
Cumbria (Carlisle) £477 £5,724 £113,025 5.1 3.3
Leeds £776 £9,312 £184,628 5.0 3.3

[1]

[1] http://www.propertyreporter.co.uk/landlords/northern-cities-continue-to-dominate-university-btl-scene.html