The great thing about the UK for student property investors is that it is home to a large number of popular university towns, which means there are a lot of locations to choose from for lucrative real estate investments.
However, there are so many cities in the country that offer good opportunities to make money from a student property investment that it can be difficult to choose which may be the best one for you. Doing the research alone can be difficult, as there are lots of factors to consider, from how many students live locally to what the average yield of properties in the area are, compared with how much cash you have to spend on purchasing a property in the first place.
To help investors make their decision, Zoopla put together a list of top ten buy-to-let (BTL) locations in the UK for student accommodation, revealing that Manchester is among the best cities in the country for this type of asset. It stated that investors can expect to charge £1,053 on average per month if they own a four-bedroom house to let out to students.
This produces a gross annual yield of 4.59%, with the typical cost of buying a property in the north-west city being £262,888.
Another location that was highlighted in the report was Bristol, where the average monthly rental figures for a four-bed house reached £1,224. The price of purchasing a buy-to-let investment in the south-west region is higher at £342,699, offering an average gross yield of 4.29%.
Comparatively, London offers a lower yield than either of these two cities, despite having a huge student population and a number of world-renowned universities. A four-bedroom house can typically accrue £3,485 per month; however, its rental yield is 4.2%. This is the result of property in the capital being so costly, with the average asking price of a four-bed home being almost £1 million at £995,104.
Interestingly, several northern cities fared well in the report, with these locations offering among the best yields for student property investors. Hull, for instance, provides yields of 4.9%, despite monthly rental figures for a four-bed house being just £737. This is due to the very low cost of buying property in the region at just £184,440 on average. Therefore, mortgage payments are lower and investors can gain a high proportion of the rent as profit.
Lincoln is another northern city in the list offering yields of 4.23%, while the Scottish city of Glasgow typically provides yields of 4.95%, according to Zoopla.
As well as looking at rental yields of the locations you are interested in buying student property, it is also wise to do more homework.
A spokesperson for Zoopla said: “As a landlord, it is important to make sure that any investment you make is targeted at the right people and in the correct area of the country.”
Investors should look to where future hotspots in the UK are going to be, as well as where they currently are. This way BTL purchasers have a good chance of being able to accrue the highest yield possible, by buying in locations that are not only growing in popularity among students but where both rental prices are high and buying costs are low.
Zoopla stated that northern cities often have cheaper properties and “due to their large populations and considerable student contingents, it is fair to say that you will have a constant level of income and higher than in other areas”.