Revealed: Where to buy student Buy to Let property to generate great rental yields

Right now, many students are heading off to university and settling into their term-time homes.

Finding good quality accommodation grows harder every year, thanks to a steadily increasing student population. In fact, according to UCAS, the number of undergraduate applicants set to start their courses this autumn has reached a record 500,000 students.

Because of this, you might be thinking about buying a property for your child or grandchild to live in while at university or be interested in generating some extra income by investing in a student Buy to Let property. Read on to find out where in the UK you’re likely to get the best return on your investment.

Demand across the UK makes student housing profitable

The Higher Education Statistics Agency (HESA) reports that there are currently more than 2.3 million undergraduate students in the UK who, according to a further study by HESA are three times as likely to rent instead of staying in campus accommodation or private halls of residence. This creates a widespread demand for privately rented accommodation across the UK.

Student Buy to Let properties are also more likely to be more profitable than renting to the general public.

The average rental yield for Buy to Let properties in the UK is 3.53% according to a SevenCapital study.

In contrast, Property Wire reports that student Buy to Let properties have an average yield of 4.4%. This means that investing in student Buy to Let properties can be worth it regardless of location.

Invest in Scotland for above-average rental yields

Despite the promising average rental yield of student Buy to Let properties, not every city in the UK has the same level of investment potential.

A report shared by Landlord News on properties near each of the top 50 ranked universities across the UK showcases the areas with the highest rental yields. This is a good indicator of where the best Buy to Let opportunities for you could be.

At the top of the list is Dundee, with a rental yield of 7.2%. The ongoing regeneration project of the Dundee City Waterfront, historic St Andrews only a short bus trip away, and Glasgow and Edinburgh within a 90-minute train ride have all played their part in attracting a 20,000-strong student population to the city.

According to The Scotsman, Dundee is also one of the most affordable places in the UK. Low property prices, coupled with a reliable demand from student tenants, allows rental prices to remain relatively high. This gives Dundee student properties their above-average rental yield.

The same pattern is repeated throughout this list. You’ll note that, in England, more affordable areas, particularly in the North and Midlands perform well, compared to expensive London where rental yields are as low as 1.7%.

Here are the top ten locations:

Rank Location University Average Rental Yield (%)
1. Dundee University of Dundee 7.2%
2. Aberdeen University of Aberdeen 6.8%
3. Glasgow University of Strathclyde 6.62%
4. Leicester University of Leicester 6.56%
5. Birmingham Aston University, Birmingham 6.5%
6. Leeds University of Leeds 6.41%
7. Nottingham Nottingham Trent University 6.39%
8. Newcastle-upon-Tyne Newcastle University 6.3%
9. Liverpool University of Liverpool 6.1%
10. Cardiff Cardiff University 5.9%

There are a few more important factors to consider when thinking about where to buy property. Look for universities with steadily increasing admissions numbers to ensure that there will be students to rent out your property in years to come, safeguarding the longevity of your investment.

Avoiding areas with plenty of competition and therefore less demand for your property can also be a good idea.

If you’re looking to rent out new properties for the 2021/2022 academic year, it’s never too early to start researching the market. Many students will be eager to pay their deposits and secure their accommodation before the end of term, so it’s never too early to buy.

Get in touch

If you’re thinking about investing in Buy to Let student properties contact us for advice on your mortgage. Email enquiry@edinburghmortgageadvice.co.uk or call 0131 339 2281 to find out how we can help.

Please note

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

Buy to Let (pure) and commercial mortgages are not regulated by the FCA.

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