Which university towns offer the best buy-to-let returns?

St Andrews has come out top in a new survey looking at which university towns offer the best yields for landlords.

Simple Landlords Insurance rated universities by yield and found that St Andrews gives landlords the opportunity to earn up to a 12% return each year.

Lancaster comes in at second place, with Loughborough and Birmingham taking third and fourth spots. All have the potential to achieve a yield of more than 10%p.a. for a student accommodation landlord. Exeter, Durham, Sussex and Nottingham also perform strongly, with yields in excess of 9.5% per annum.

Alex Huntley, head of operations at Simple, said: “We took the top universities in the country – according to the Complete University Guide and examined which offered the smartest investment opportunity. While the academic league tables are always led by Cambridge and Oxford, our study shows that neither of those locations offers the strongest yield for a buy-to-let investor.

“Unlike other studies, ours centred in on the house prices in the streets where students at each of the universities actually choose to live. It compared the cost of buying one of these properties with the rent that is actually paid by students studying at the establishments in question.”

Oxford offered the lowest value of the universities covered by the study. Properties in popular student area Iffley Road change hands for about £720,000, and could net a yield of 3.33% (£2,000 a month). That makes the high initial outlay look steep, with much less lucrative returns.

The University of East Anglia in Norwich, and Cambridge, Bristol and Surrey universities all feature towards the bottom of the table.

“It goes to show that with some research, there are some great investment opportunities out there for people prepared to target the student market,” adds Alex.

“Rising educational costs means that more and more students are having to work to support themselves during university, meaning that, many are there to work rather than just party, and often don’t deserve their bad reputation. One way to mitigate the risk is to invest in an area you know for a student you know – and we’re seeing more people with children at university choosing to invest and buy a property rather than see rent going down the drain.”

“The real key in renting to students is to make sure you’ve got the right insurance. Look into accidental and malicious damage cover, for instance, and make sure you’re inspecting regularly so small issues don’t become bigger, more expensive problems.

Universities offering the best yields for landlords