University towns and cities can provide generous rental yields thanks to the high number of potential tenants – but which locations offer the highest returns?
New analysis by mortgage broker, Trussle, has revealed 66% of parents would purchase a buy-to-let for their child at university to alleviate living costs.
As many as 53% said they would also consider downsizing to support their child’s further education, suggesting property is set to play a big role in helping children through university.
To complement the research Trussle also looked at which university towns and cities would offer the best rental yields.
Indeed, the private rental sector has been affected by changes to taxation and the stamp duty surcharge in recent years, making the overall costs more expensive.
Yet, Trussle said research found student buy-to-lets consistently outpaced the rest of the market by as much as 17.86% in rental yield.
Its analysis put Newcastle at the top of list as landlords could potentially earn a yield of 9.4% in the city.
Next on the list were Southampton and Cardiff.
| University (Rank) | City/town | House Price | Rental Income (pcm) | Rental Income (annual) | Rental Yield |
| Newcastle University (20) | Newcastle | £192,567 | £1,508 | £18,096 | 9.40% |
| University of Southampton (16) | Southampton | £235,911 | £1,757 | £21,084 | 8.94% |
| Cardiff University (28) | Cardiff | £274,531 | £1,748 | £20,976 | 7.64% |
| University of Reading (=29) | Reading | £279,139 | £1,744 | £20,928 | 7.50% |
| University of Manchester (8) | Manchester | £246,473 | £1,518 | £18,216 | 7.39% |
(Source: Trussle)
Miles Robinson, Head of Mortgages at Trussle, said: “It’s true that buy-to-lets aren’t the bargain that they once were. Changes to tax and the Stamp Duty Surcharge have impacted returns, which made rental the king of investments, leading to a peak in popularity during 2007.
“However, this new data shows that property is still seen as a safe and reliable way of generating extra income. This can be both in the short term, through rent collection and long term gains in house prices.
“In addition, the low interest climate means would-be landlords can lock-in a competitive buy-to-let mortgage, which are typically interest only.”
Trussle also investigated the UK’s cheapest university towns to purchase a buy-to-let property. Belfast topped this list with an average house price of £152,175, followed by Aberdeen (University of Aberdeen, £154,480) and Dundee (University of Dundee, £174,173).
| University (Rank) | City/town | House Price |
| Queen’s University Belfast (=29) | Belfast | £152,175 |
| University of Aberdeen (22) | Aberdeen | £154,480 |
| University of Dundee (=29) | Dundee | £174,173 |
| Newcastle University (20) | Newcastle | £192,567 |
| University of Glasgow (10) | Glasgow | £193,388 |
(Source: Trussle)
