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The top 10 universities for buy-to-let investments

LaToya Harding
·3 min read
BATH, ENGLAND - MAY 13:  A 'To Let' letting sign is seen displayed outside a rental property in an area that is popular for buy-to-let properties on May 13, 2014 in Bath, England.  The Labour party has announced that if it wins the election it would cap rent increases in the private sector and scrap letting fees to estate agents.  (Photo by Matt Cardy/Getty Images)
During the first national lockdown the UK property market came to a total shutdown as people had to stay at home to curb the spread of COVID-19. Photo: Matt Cardy/Getty Images

The University of Southampton has been named the best university to invest in buy-to-let property in the UK.

That is according to student accommodation platform UniHomes, which looked at the top universities offering the best option for landlords in the student sector.

It analysed market data around the top 50 UK universities to find which offered the most profitable buy-to-let investment based on the current average rental yield in each university postcode.

The University of Southampton, located in the SO17 postcode, was home to an average house price of £226,489 ($307,764) while the current average rent sits at £1,388 per month.

As a result, a buy-to-let in the university’s postcode currently offers an average rental yield of 7.4%.

Nottingham was the second-best bet for a profitable bricks and mortar investment in the buy-to-let sector. The University of Nottingham’s NG7 postcode was home to an average rental yield of 7%, while Nottingham Trent’s NG1 postcode comes in slightly lower at 6.7%.

The NE1 postcode, home to Newcastle University, also ranks within the top five with an average yield of 6.3%, along with the University of Dundee (6%).

The Universities of Cardiff (5.9%), Leicester (5.9%), Strathclyde (5.8%), Kent (5.8%) and Warwick (5.7%) also make the top 10 best buy-to-let universities.

READ MORE: How Brexit has impacted UK house prices

Phil Greaves, co-founder of UniHomes, said: “It’s no secret that the profitability of the buy-to-let sector has been hit hard by a string of legislative changes, particularly reductions on tax relief and an increase in stamp duty. With many also financially impacted due to the current pandemic, many landlords have also seen their level of rental income impacted.

“However, the good news is that despite the current landscape, demand for higher education and student accommodation remains high, as many persist with their study plans with an eye on life after the pandemic.

“As a result, the student accommodation sector has continued to provide a consistent level of demand for many landlords, allowing them to avoid any lengthy void periods. In addition, many students finance their living arrangements via a student loan and so they don’t present the financial unpredictability that many are experiencing in the regular rental market at present.”

UniHomes works alongside letting agents in 25 UK cities, advertising their property portfolios to generate student enquiries. The platform, founded by Phil Greaves, Bradley Cox and Luca Mori, is self-funded with no outside investment.

During the first national lockdown the UK property market came to a total shutdown as people had to stay at home to curb the spread of COVID-19. This included orders to avoid moving house as well as house viewing postponements. A number of construction sites were also temporarily closed.

As restrictions eased later in the year Chancellor Rishi Sunak announced a suspension of stamp duty on property sales of up to £500,000 until March 2021.

The UK housing market is expected to cool this spring with the stamp duty holiday ending and the existing Help to Buy scheme tapering.

Watch: Why are house prices rising during a recession?