Letting out homes near top universities gives landlords yields of up to 5.22%, says an online rental agency.
The lure of a university place in one of these locations means student landlords receive up to five applications for every bed.
Competition is so great, 80% of students looking for accommodation are turned away.
Reputation is also the main way rooms are filled, says research by the website Student Tenant. £151,465, making the city one of the cheapest places to invest
Where to find the best yields
The top three placings for investment returns go to universities in the Midlands and North:
- Durham gives landlords the greatest yields at 5.22% a year. The average four-bedroomed home costs
- Warwick has 25,000 students and average four-bed home prices of £338,220, which are among the most expensive in the country. Properties yield 5.11%.
- Loughborough is just up the road from Warwick and offers rental yields of 5.00% and is home to 16,500 students.
Student Tenant managing director Danielle Cullen said: “For anyone looking to invest in a student property, it’s always advised to assess the potential rental yields in the area to see if it’s a sound investment. However, I must stress that rental yields aren’t everything and there are many things to consider before purchasing a student rental property.
“Is the property located near the university? Does the property have parking spaces? What is the current condition of the property? It’s important to collect as much information before taking the plunge, to ensure you get the best possible deal.
The rest of the top 10
“Looking just at rental yields for the top ten ranking universities, it might seem attractive to invest in a student property in an area like Warwick or Loughborough where yields are around 5%. However, when you account for the higher property prices, it might not be the best option available for investors.”
Lancaster (4.46%) and Fife (4.60%) generated the next best rental returns.
Three London universities, Cambridge and Oxford also featured in the top 10, but their yields were lower due to higher property prices.
The leading universities were drawn from analysis by the University League Table 2018.