Best student buy-to-let yields are in smaller university towns
The best yields on student lets are located in smaller university towns or cities, said Paragon Bank.
The buy-to-let specialist lender added that locations with just one university fare particularly well, with seven of the top 10 locations for student yield only boasting one main university.
Student populations in these higher-yielding locations are also typically smaller at less than 25,000.
Swansea was the top location for rental yield, with an average rental income of £22,140 generating a yield of 9.56% against the average purchase price of £231,534.
The city is served by one main university, Swansea University, which boasts 20,3751 students.
Hull came second, with the average student property in the city generating a return of 8.68%. Again, the location only hosts one main university, University of Hull, with 14,255 students.
In the top 10 locations for yields on student lettings, only Liverpool, Coventry and Leeds have more than one university.
1. Swansea – 9.56%
2. Hull – 8.68%
3. Plymouth – 8.41%
4. Liverpool- 8.25%
5. Coventry – 8.05%
6. Chester – 7.92%
7. Stoke – 7.86%
8. Lincoln – 7.84%
9. Preston – 7.77%
10.Leeds – 7.62%
Richard Rowntree, Paragon Bank’s managing director for mortgages, said: “When it comes to student property investment, heading to the major cities doesn’t always generate the best returns, as these figures demonstrate.
“Smaller towns and cities will typically have a lower proportion of purpose built student accommodation, which has become more commonplace in major cities, whilst major cities also offer a wider array of property that students can rent, such as city centre apartments or build-to-rent schemes.
He added: “Smaller locations will often offer more traditional type student accommodation, such as houses in multiple occupation, whilst property values are generally cheaper in these locations, which can help generate better returns.”