Research by property developer Stripe Property Group, reveals that rental homes located near to universities command an average yield 1.3% higher than those in the wider area, increasing a landlord’s expected annual income by almost £6,000.
Stripe Property Group analysed the average yield available surrounding a university and how this compared to the yield that can be generally expected elsewhere across the rental market.
The research shows that across Britain, a rental property located close to a university commands an average yield of 5.2%.
Meanwhile, those rental properties that aren’t university adjacent command an average yield of just 3.9%. This means that investing in a buy-to-let within close proximity to university can boost rental returns by 1.3%.
A breakdown of the home nations reveals that, in Wales, university yields are 1.4% higher; in England they’re 1.2% higher, and in Scotland, they’re 0.7% higher.
A regional analysis reveals that the very best university yield boosts are found in the North East where a property near a university costs an average of £185,000 which is £27,076 more expensive that the overall regional average of £157,924. The expected yield, however, is 6.5% for a property close to a university compared to 4.5% elsewhere, a positive difference of 2%.
In the East Midlands, homes near universities are -£30,411 cheaper than the wider regional average and deliver a yield of 5.5%. This is 1.7% higher than the wider regional average of 3.9%.
In Yorkshire & Humber, homes close to universities are -£33,973 more affordable than the wider regional average and generate a yield of 6.2%. Compared to the regional average of 4.6%, this is a boost of 1.6%.
Rental homes close to universities also boast higher yields in the East of England (0.9%), West Midlands (0.9%), South West (0.7%), North West (0.5%), and South East (0.4%).
The only region where close proximity to universities does not result in higher yields is London. This is largely due to the fact that homes close to universities command an average price of £1.1 million, more than half a million more than the capital’s overall average price of £537,920.
As such, yields close to universities are just 3.3%, -0.9% lower than the city’s wider average yield of 4.2%.
Managing Director of Stripe Property Group, James Forrester, commented:
“Investing in buy to let properties near universities is one of the safest bets available on the property market. A consistent stream of tenants in need of quality accommodation means that void periods can be reduced considerably, provided that, as a landlord, you cultivate a good reputation among your tenants.
In the case of purpose built student accommodation, it’s also fair to say that the quality of your investment is not only vastly superior, but the fact it is managed helps to ensure it stays this way for far longer.
Perhaps more so than any other demographic, students value convenience and location over almost anything else – getting to and from lectures in five minutes compared to an hour makes a world of difference to students and they’re often willing to pay a premium for that convenience.
And it’s worth remembering that there are many different types of students populating modern universities. You’ve got the classic school leavers, of course, but you’ve also got a potential audience of overseas students and mature students.
When considering how to present and market your properties, it’s worth bearing in mind what makes each of these groups tick. If you get it right, university locations provide brilliant, reliable returns every single year.”
Data tables and sources can be viewed below.