Durham is the university city which offers landlords the best buy-to-let returns, new research has revealed.
Simple Landlords Insurance yesterday published a new league table rating universities by yield. Durham took top spot, with the possibility of earning up to 11.5% per annum in rental returns.
Warwick was in second spot with an average yield of 10.3%, while Manchester was in third place with an average yield of 8.5%.
The research was compiled by comparing the rental price advertised for student houses on popular roads with the estimated property values for 20 of the UK’s top universities.
Despite the above average rental yields on offer to those willing to rent to students, only one fifth of landlords are happy to do so. A poll of 400 landlords carried out by Simple Landlords Insurance found that 79% of people haven’t or wouldn’t consider renting to students. Most prefer to play it safe by exclusively renting to professional working tenants.
It’s clear, though, that student properties can command significantly higher rents than their estimated market value. For similar properties on the same street as the student houses, rental value estimates from property website Zoopla showed that they were lower than the price advertised specifically to student tenants for 17 out of 20 towns.
As an example, a four bedroom house listed for rent in Chailey Road, Brighton, was marketed for students of Sussex and Brighton universities for £2,200 per month, giving an estimated yield of 8.2% based on sold prices of four bedroom houses on the same street. Renting a four bedroom house to tenants in an open market, however, would see an average yield of just £1,325 (or 4.9%).
“There are some great investment opportunities for the minority of landlords who are prepared to rent to the student market,” Tom Cooper, director of underwriting at Simple Landlords Insurance, said. “And it’s not as risky a move as you might think.
“Often students don’t deserve their bad reputation. With university fees today’s students take their studies much more seriously, and many also work to see themselves through the semester. It’s not quite the hard-partying picture many have of student life.”