Stoke, Liverpool, and Edinburgh have been highlighted as the top regions for achieving high rental yields from student accommodations.

Research conducted by Paragon Bank has revealed that Stoke stands out as the leading city for student rental yields. Landlords in Stoke, who rent properties to students at Stafford and Keele universities, have realised an impressive average yield of 9.43% as of July 2024. This yield is based on offer data accumulated over the past two academic years.

In practical terms, the average annual rental income for student properties in Stoke was reported to be £13,860. The typical price for a student rental property in the city is approximately £146,944. These figures reflect the strong returns landlords are currently experiencing in Stoke.

Similarly, Liverpool and Edinburgh also show promising yields for student rentals, though specific figures for these cities were not detailed in the report. The general trend indicates that student rental properties in these areas are proving to be a lucrative investment, with competitive yields that attract property investors looking to capitalise on the student housing market.

Student postcodes in Liverpool have achieved the second-highest rental yields, with a notable 8.93%. This impressive figure is surpassed only by Stoke, which leads with a yield of 9.43%. Edinburgh follows closely with an 8.23% yield, while York also performs well, reaching 8.12%. Coventry, home to students from Warwick University and the University of Coventry, completes the top five with a yield of 8.08%.

The research also underscores the strong performance of properties located in areas associated with Russell Group universities. This group, comprising 24 prestigious research-focused institutions, includes 13 universities that feature prominently among the top 15 yielding university towns and cities.

Across the UK, properties in student postcodes have achieved an average yield of 7.04% as of July 2024. This figure marks a significant increase from the 6.12% yield recorded during the same period two years ago. The rise in yields reflects growing investor interest and the continued demand for student accommodation in key university cities.

Louisa Sedgwick, Managing Director of Mortgages at Paragon Bank, commented on the ongoing appeal of student properties for landlords. She explained that student accommodation continues to attract portfolio landlords due to its potential for higher yields compared to traditional buy-to-let properties. This advantage makes student properties an attractive option for those looking to maximise returns on their investments.

One of the key benefits of investing in student property is the lower risk of arrears. Sedgwick noted that this is often due to the involvement of parental guarantees, which provide an additional layer of security and help ensure that rent payments are made on time.

The research from Paragon Bank highlights that the best-performing locations for student property yields are closely linked to high-quality educational institutions. This trend is reflected in the data, which shows that many of the top-performing areas are home to prestigious universities.

Specifically, 13 out of the top 15 yielding locations are associated with Russell Group universities. This suggests a strong correlation between high yields and the presence of these leading academic institutions.

Sedgwick’s insights underscore the importance of choosing student properties in areas with reputable universities. This strategy not only enhances the likelihood of achieving higher rental yields but also provides a stable and reliable income stream for property investors.

Neil Smith, Head of Surveyors at Paragon Bank, noted, “Portfolio landlords often possess extensive knowledge of local student rental markets. They understand the prime areas and specific streets that consistently attract strong demand from students. This expertise allows them to target properties that are more likely to be in high demand among university students.

“With forecasts indicating a rise in university enrolments over the next few years, the need for student accommodation is expected to grow. This increase in demand will likely put additional pressure on the rental market as more students seek suitable places to live.

“Part of this demand will be met by Purpose Built Student Accommodation (PBSA), which is designed specifically to cater to student needs. These purpose-built properties are increasingly popular for their modern amenities and tailored facilities. However, private landlords who offer traditional student rentals will still be crucial in addressing the overall housing requirement.

“Private rented student properties will continue to be an essential component of the accommodation mix. Despite the rise of PBSA, many students and landlords alike find value in the flexibility and often more personal touch offered by traditional rental options.”

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