Student property landlords with rentals in smaller university towns or cities generally generate the best returns, according to new research from Paragon Bank.
Indeed, the findings reveal the top 10 best locations for investors to purchase student property, with Swansea topping the list with an average yield of 9.56% against an average property price of £231,534.
It was discovered that the best yields are often found in towns and cities with just one university, with seven of the top 10 having only one main higher education institution. Unsurprisingly, these typically have smaller student populations than the larger towns and cities, with some of the best locations having a student population of less than 25,000.
Hull was found to be the second highest-returning location, with annual yields of 8.68% and a student population of just over 14,000. Liverpool, Coventry and Leeds were the only cities with more than one university to feature in the top 10.
With yields of 8.25% against an average property price of £225,178, Liverpool was found to be the most lucrative major city with multiple universities.
According to The Mistoria Group, UK and international investor enquiries for student accommodation in Liverpool, Salford and Bolton has increased by 21% in the last six months.
Mish Liyanage, Managing Director of The Mistoria Group, explains: “Without doubt, investors achieve considerably higher yields with property let to students, compared to those let to non-students in the same town or city. For example, student landlords in Liverpool made an average Gross rental yield of 13% in the third quarter of 2021, compared to 9% for those who did not let to students. Student property can either be similar to a normal buy-to-let, where the whole property is rented between friends who cohabit, or a student HMO where students rent each room individually on their own tenancy agreement. A property is deemed an HMO if at least three tenants live there, forming one household and sharing bathroom or kitchen facilities with one another. Investors can currently acquire a four bed HMO for students and professionals, fully refurbished and furnished and tenanted for the coming year, for less than £175,000 in Liverpool. Investing in student HMO accommodation offers a long-term investment option, as the property is highly likely to be in constant demand throughout the calendar year.”