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Recent research from Totally Money found that buy to let landlords will find better yields in UK towns and cities with a high student population.
The Totally Money research found that university towns and cities such as Liverpool and Middlesbrough offer rental yields up to seven times higher than London due to their more affordable pricing. The two postcodes close to two of Liverpoool’s univertities, L6 and L7 were found to be the top two rental property investment hotspots. They each offered yields of almost 12 per cent, with average rents in the two postcodes £1,162 and £1,946 respectively.
Middlesbrough’s TS1 town centre postcode where Teeside University is situated, took third place, offering average rental yields of 10.94 per cent. Average rent in the area stands at £595 per month. Average asking house prices stand at just over £65,000. This renders it one of the most affordable areas in which to invest.
In London, the best yields are found by Totally Money to be in the East. Plaistow, Manor Park, Chingford, Stratford, East Ham and Poplar all rank in the top ten London postcodes for rental profits. Outside of the capital, the lowest scoring yields were found in Bournemouth’s BH14 where yields were just 1.68 per cent. Crewe also performed poorly at 1.74 per cent.
The research also found that all postcodes in the 25 lowest yielding areas had high average house prices of more than £300,000. This suggests that affordable house prices are better at generating high rental yields.
Managing Director of Housing Hand, Jeremy Robinson, comments: ‘Landlords and letting agents that let to UK and international students know they are getting some of the best yields in the country. Students today want high-end accommodation and are prepared a premium price for ensuites, plasma TVs, premium white goods, super-fast broadband and security. Research shows that outside London, students are paying an average of £568 rent per month. We know that students will pay more for shared accommodation that is close to a university.’
He continued: ‘International students have even larger budgets for a rental property, especially those coming from UAE and China. The low value of sterling means that many international students will be starting university in 2018, with a sizeable budget of between £1,000 and £2,000 a month. We know that the no 1 choice for new students after halls is an HMO, which offers excellent yields for landlords, as each bedroom is rented compared with a family home, where there are usually only two people on the lease.’