Birmingham has the highest rental yields surrounding a university in the UK, making it the top of the list for anyone looking for a buy to let property in a student hub, according to new research.
A new analysis shows that in the city 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 research from letting agent Urban used the local outcode to find the average house and rental prices of the area and divided the annual average rental cost by the average property price, giving the percentage of the rental yield of that outcode.
It explains that the lower than average house prices in Birmingham’s B4 at £134,388 offers a more affordable foot on the ladder and landlords can still collect £15,672 a year in rent.
Going further north to Teeside University in Middlesbrough, the rental yield is the third highest at 10.73%.
LS2 in Leeds, where both the Leeds Art University and the University of Leeds are located, is home to a rental yield of 9.22% and the University of Edinburgh in EH8 has the sixth highest rental yield at 8.61%, closely followed by Nottingham Trent University in NG1 with an 8.41% rental yield and Bangor University in LL57 with 8.1%.
There’s a tight race for the ninth and tenth highest rental yield surrounding Edinburgh Napier University in EH11 at 7.65% and De Montfort University in Leicester LE1 at 7.55%.
The lowest three areas for rental yield surrounding universities would be 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.
Not far behind is the University of Westminster in London’s W1B, where the rental yield is a mere 2.67% and the Institute of Cancer Research in SW7 has 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%.
The only northern university to make the lowest rental yield list is Leeds Trinity University in LS18 at 2.93%, then overall is the University of Bristol in BS8 at 3%, Saint Mary’s University Twickenham in TW1 at 3.05%, Buckinghamshire New University in HP11 at 3.17%, and finally, the University of Buckingham in MK18 at 3.2%.
‘The buy to let market will always be a profitable business close to the nation’s university campuses despite the impositions that have been forced on the buy to let market of late, as thousands of students are in desperate need for accommodation every year,’ said Urban founder Adam Male.
‘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. 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,’ he explained.
‘Although the housing market is stronger in London and the South East in terms of actual prices, the Midlands and further north provides a much more attractive proposition in terms of rental yields and these areas are also 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,’ he added.