As A-Level students discover if they have achieved the grades they need to get into their university of choice, and students get ready to return to their studies at university and college, now could be the perfect time to invest in the student buy-to-let market. A recently released study has revealed that landlords who let property to students are reaping impressive rewards, with above average rental returns in the market. In research published this month, university towns were ranked by attractive rental return rates for landlords in the buy-to-let market.
Located in the North East, the city of Durham ranked the number one location for rental yields in student housing, offering an impressive average rate of 11.5 per cent annual returns. Warwick came in second place, with an average annual rental yield of 10.3 per cent, and the city of Manchester came third at 8.5 per cent. The research was undertaken by insurance firm, Simple Landlords, who compared the advertised rental prices for student properties located on the most popular roads against the average property values across the 20 top university towns within the UK.
However, studies have shown that just one fifth of UK landlords are prepared to let their properties to students. A survey of 400 landlords showed that 79 per cent of those questioned would not consider letting their property to students, explaining that they preferred instead to rent to more reliable tenants such as working professionals. The study has shown that there are significant rewards for landlords who rent to students, with student properties commanding much higher rental returns than the estimated market value. Property rental value estimates found on Zoopla, the real estate website, has shown that similar rental properties were advertised at lower prices for professionals compared to student housing located on the same streets for all but 3 of the 20 university towns across the UK.
For example, a large, four-bedroom home located in Brighton was marketed for rent by students of Brighton and Sussex universities at a monthly rent of £2,200, with an average yield of 8.2 per cent for landlords based on the sold prices of similar properties in the same road. However, a similar property rented by tenants on the open market could command a rent of only £1,325 per month, a yield of 4.9 per cent. The Director of Underwriting at Simple Landlords, Tom Cooper, has emphasised that there are good investment opportunities available to the minority of investor landlords willing to let to students. With sky-high yields, it could be time to reconsider letting to students.
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