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Which UK towns top student buy-to-let investment league?

Tuesday 1st October 2013

The best towns for student buy-to-let investors seeking the highest rental returns, according to research, are Glasgow, Hull and Manchester.

According to the study by property website Zoopla.co.uk, with an average gross yield of 4.95% on typical four-bedroom student property, Glasgow tops the investment league table when it comes to student buy-to-lets.

Rounding out the top five behind Glasgow (4.95%) are Hull (4.80%), Manchester (4.59%), Cambridge (4.54%) and Bristol (4.29%).

The research revealed that the average gross yield on a typical four-bed student property across the UK is 3.79%. In terms of university towns that student landlords might wish to avoid, those with the worst returns currently were identified as Carlisle (2.58%), Middlesbrough (2.61%) and Bournemouth (3.09%).

Despite having the largest student population in the UK, London came in as only the tenth most attractive place in the UK to invest in student accommodation. Despite fierce demand for rental accommodation, house prices in the capital are increasing more rapidly than rents and reducing the returns on offer for landlords. The average gross yield on a typical student property in London is 4.20%.

In terms of best value for students, the cheapest digs are in Middlesbrough where the average monthly rent for a four-bed property is just £562. At the other end of the scale, London is by far the most expensive with an average four-bed property costing £3,485 per month. Oxford (£1,834) and Cambridge (£1,628) are also among the most expensive.

Lawrence Hall of Zoopla.co.uk commented: “The largest number of students or most prestigious university clearly isn’t necessarily best for investment returns. Landlords need to do their research and take into account the student demand, property supply, average property values and average monthly rents. There is no apparent North/South divide when it comes to student buy-to-let investments and a number of towns in the North are showing higher gross yields than the South as a result of property values having remained lower over the past few years whilst rental demand has increased.”

BEST STUDENT BUY TO LET TOWNS

Rank

University Town

Avg. Monthly Rent
(4 bed house)

Avg. Asking Price
(4 bed house)

Gross Yield

1

Glasgow

£1,083

£262,888

4.95%

2

Hull

£737

£184,440

4.80%

3

Manchester

£1,053

£275,132

4.59%

4

Cheltenham

£1,631

£429,585

4.56%

5

Cambridge

£1,628

£429,976

4.54%

6

Buckingham

£1,502

£405,017

4.45%

7

Luton

£1,076

£291,454

4.43%

8

Bristol

£1,224

£342,699

4.29%

9

Lincoln

£877

£248,980

4.23%

10

London

£3,485

£995,104

4.20%

Source: Zoopla.co.uk

WORST STUDENT BUY TO LET TOWNS

Rank

University Town

Avg. Monthly Rent
(4 bed house)

Avg. Asking Price
(4 bed house)

Gross Yield

1

Carlisle

£608

£282,306

2.58%

2

Middlesbrough

£562

£258,770

2.61%

3

Bournemouth

£1,452

£564,560

3.09%

4

Guildford

£1,902

£734,763

3.11%

5

Stoke-on-Trent

£677

£258,314

3.14%

6

Bath

£1,520

£579,370

3.15%

7

Worcester

£946

£359,815

3.15%

8

Huddersfield

£736

£277,027

3.19%

9

Derby

£764

£277,808

3.30%

10

Birmingham

£766

£270,371

3.40%

Source: Zoopla.co.uk

Commenting on the report from Zoopla on the top student towns for buy-to-let investors, Stuart Law, CEO of Assetz, said: “The research published today gives weight to a trend we are seeing in the broader buy-to-let market. The London property scene has owned the business page headlines and developments in the capital have been conflated with sentiments on the broader property market and the now clichéd ‘property bubble’.

“The ‘London effect’ is not being seen across the entirety of the UK and in Northern regions property prices are yet to see the full price boom already seen in London according to the Office for National Statistics. Most regions still offer a chance to buy at ground level prices and with strong rental income as well.

“It is no surprise to me that Glasgow, Hull and Manchester are the top three student buy-to-let towns for investors. They have very strong student populations and therefore strong demand and student investments continue to be one of the strongest property investment sectors.”

              

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