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Smaller university towns deliver best student yields

  • Seven of the top 10 locations for student yields are one university towns or cities
  • Swansea tops the list with an average yield of 9.56% for student property
  • Hull, Plymouth, Liverpool and Coventry complete the top five

Landlords with student property located in smaller university towns or cities typically generate the best yields, analysis by Paragon Bank has revealed.

Single university locations fare particularly well, according to Paragon’s data, with seven of the top 10 locations for student yield only boasting one main university. Student populations in these locations are also typically smaller at less than 25,000.

Swansea was the top location for rental yield based on application data over the past two years, with the average rental income of £22,140 generating a yield of 9.56% against the average purchase price of £231,534. The city is served by one main university, Swansea University, which boasts 20,3751 students.

Hull came second in terms of yields, with the average student property in the city generating a return of 8.68%. Again, the location only hosts one main university, University of Hull, with 14,255 students.

Paragon’s Studying student buy-to-let report found that out of the top 10 locations, only Liverpool, Coventry and Leeds have more than one university.

Richard Rowntree, Paragon Bank Managing Director for Mortgages, said: “When it comes to student property investment, heading to the major cities doesn’t always generate the best returns, as these figures demonstrate.

“Smaller towns and cities will typically have a lower proportion of purpose built student accommodation, which has become more commonplace in major cities, whilst major cities also offer a wider array of property that students can rent, such as city centre apartments or build-to-rent schemes.

He added: “Smaller locations will often offer more traditional type student accommodation, such as houses in multiple occupation, whilst property values are generally cheaper in these locations, which can help generate better returns.”

Other locations within the top 10 include Chester, Stoke-on-Trent, Lincoln and Preston.

Looking more broadly, 14 of the top 20 student yielding locations were single university town or cities. Of the remaining major locations, student property in Sheffield (7.58%), Newcastle (7.30%) and Cardiff (7.16%) generated the best yields.

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551