Postcodes around Southampton and Nottingham universities are some of the best for landlords looking to invest in buy-to-let properties to rent to students, offering high yields, new research shows.
UniHomes, a student accommodation platform, analysed market data around the top 50 UK universities to find which offer the most profitable buy-to-let investment based on the current average rental yield in each university postcode.
It found that University of Southampton is the UK’s best buy-to-let university at present. Located in the SO17 postcode, the area is home to an average house price of £226,489 ($308,039) 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 is the second-best bet for a profitable investment in the buy-to-let sector. The University of Nottingham’s NG7 postcode is 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.
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Co-founder of UniHomes, Phil Greaves, noted that the profitability of the buy-to-let sector has been hit by 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,” he said.
However, he said “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,” he added.
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