As the start of the new university year looms, many parents will be asking if it makes financial sense to buy a property to help with their children’s university accommodation costs.
There will be undoubtedly be many factors that need to be considered, including the price of the house, the rent that can be achieved, and - perhaps most importantly from an investment perspective – what yield the property will produce.
Help is at hand with the decision-making process as new research shows where the best yielding university towns for landlords can be found.
Northern towns take top spots
The figures from property crowdfunding platform Property Partner found that northern university towns have the best yields, with Sunderland taking the top spot with a net yield of 6.9 per cent.
Other best performers include Middlesbrough in second place at 5.9 per cent and Newcastle in eighth place at 4.3 per cent. Birmingham is ranked in third position, with a yield of 4.5 per cent. The relatively high yield stems from the average house price in the area being comparatively low at £116,732.
Other high performers include Edinburgh in fifth place with a yield of 4.4 per cent and Manchester with a yield of 4.3 per cent.
Returns squeezed in the south east
By contrast, London and the south east dominate the worse performing university cities for rental yields as a result of double-digit price rises putting the squeeze on returns.
It includes the exclusive London borough of Kensington and Chelsea - where Imperial College is based - which typically generates yields of just 1.3 per cent.
There are, of course, other factors that need to be taken into account when buying a property to help with a child’s university accommodation costs, but knowing the typical yields in the area you are considering is a good starting point.
| University town | Median Rent pcm | Gross annual rent | Average house price | Average gross annual yield % | Average net annual yield % |
|---|---|---|---|---|---|
| Sunderland | £575 | £6,900 | £65,201 | 10.6 | 6.9 |
| Teesside (Middlesbrough) | £425 | £5,100 | £56,272 | 9.1 | 5.9 |
| Aston & Birmingham City | £676 | £8,112 | £116,732 | 6.9 | 4.5 |
| Salford | £750 | £9,000 | £131,863 | 6.8 | 4.4 |
| Edinburgh | £1,101 | £13,212 | £197,010 | 6.7 | 4.4 |
| Manchester Metropolitan | £895 | £10,740 | £160,315 | 6.7 | 4.4 |
| Manchester | £750 | £9,000 | £135,174 | 6.7 | 4.3 |
| Newcastle & Northumbria | £823 | £9,876 | £150,609 | 6.6 | 4.3 |
| Nottingham & Nottingham Trent | £794 | £9,528 | £151,535 | 6.3 | 4.1 |
| Coventry | £901 | £10,812 | £179,412 | 6.0 | 3.9 |
| Bangor | £750 | £9,000 | £156,173 | 5.8 | 3.7 |
| Huddersfield | £540 | £6,480 | £116,802 | 5.5 | 3.6 |
| Portsmouth | £925 | £11,100 | £201,434 | 5.5 | 3.6 |
| Queen’s, Belfast | £802 | £9,624 | £183,505 | 5.2 | 3.4 |
| Edge Hill (Ormskirk) | £1,040 | £12,480 | £239,298 | 5.2 | 3.4 |
| Durham | £650 | £7,800 | £151,438 | 5.2 | 3.3 |
| Southampton | £901 | £10,812 | £212,852 | 5.1 | 3.3 |
| Cumbria (Carlisle) | £477 | £5,724 | £113,025 | 5.1 | 3.3 |
| Leeds | £776 | £9,312 | £184,628 | 5.0 | 3.3 |
Does buying a rental property in a university town appeal to you? Tell us in the comments.