The UK’s second largest city is home to the nation’s highest rental yields surrounding a university, making it the top choice for anyone looking for a buy-to-let property in a student hub.
According to Urban.co.uk, both Aston University and Birmingham City University in outcode B4 share the same rental yield of 11.66%, with an average annual rental price of £15,672.
The online letting agent achieved these results by using the local outcode to find the average house and rental prices of the area and dividing the annual average rental cost by the average property price, giving the percentage of the rental yield of that outcode.
The best university buy-to-lets
Universities in Birmingham take the two top spots, with the city seen as a good alternative for those eager to avoid buying in some of the UK’s more expensive cities. The lower-than-average house prices in Birmingham’s B4 (£134,388) offers a more affordable foot on the ladder and landlords can still collect £15,672 a year in rent.
Further to the north, Teeside University in Middlesbrough (TS1) rests in third place, with rental yields reaching 10.73%.
LS2 in Leeds, where both the Leeds Art University and the University of Leeds are located, is home to an average rental yield of 9.22%.
Meanwhile, the University of Edinburgh in EH8 has the sixth highest rental yield at 8.61%, closely followed by Nottingham Trent University (NG1) with an 8.41% rental yield and Bangor University (LL57) with 8.1%.
The ninth and tenth highest rental yields surrounded Edinburgh Napier University in EH11 at 7.65% and De Montfort University in Leicester LE1 at 7.55%.
The worst university buy-to-lets
According to Urban’s findings, the lowest three areas for rental yield surrounding universities were in Prime Central London. South Kensington’s Heythrop College in W8 has a 2.49% rental yield, making it the least profitable place in the UK for a buy-to-let property near a university.
The University of Westminster in London’s W1B wasn’t much better with a rental yield of 2.67%, followed by the Institute of Cancer Research in SW7 with only a slight edge of 2.7%.
Moving to Cambridge, the University of Cambridge in CB2 has a rental yield of 2.87%, while Anglia Ruskin University in CB1 sits at 2.92%. Despite the similar rental yield in both, CB2 has a higher annual rental average (£19.092), compared to £13,704 in CB1.
The only northern university to make the lowest rental yield list is Leeds Trinity University in LS18 at 2.93%.
Other locations performing poorly on rental yields were the University of Bristol in BS8 (3%), Saint Mary’s University Twickenham in TW1 (3.05%), Buckinghamshire New University in HP11 (3.17%) and the University of Buckingham in MK18 (3.2%).
Up north the most profitable option
According to Adam Male, founder of Urban.co.uk, despite the impositions that have been forced on the buy-to-let market, it will always be a profitable business close to the nation’s university campuses, as thousands of students are in desperate need for accommodation every year.
“For those looking to get on the rental ladder, looking to invest near a university guarantees an annual income and one that is often footed by the government via student loans,” he continued. “While it does have its negatives and can result in higher upkeep costs, investing near to one of these universities can make a great sense financially.”
While the housing market is stronger in London and the South East in terms of actual prices, the Midlands and further north provides a more attractive proposition in terms of rental yields, and are home to some of the UK’s top universities.
“These are the sort of factors that buy-to-let landlords need to consider in the current landscape when looking to invest,” Male advised.