UK top 10 BTL property areas for student investment

Glasgow is the top area in the United Kingdom for student buy-to-let property investment, according to new research data from leading property website Zoopla. Hull and Manchester came in second and third, with Bristol, Lincoln and surprisingly, London, the lowest-ranked in the top-ten.

How the data was recorded

Zoopla collated the data for the report by taking the average asking prices attributed to four-bedroom properties in student hotspots. These prices were then compared to the average student rent achieved, giving a total gross yield.

The report from Zoopla goes against other findings from Knight Frank, which suggested that London was the most profitable region for student buy-to-let investment. It is worth noting that the report from Knight Frank took capital growth into account, whereas Zoopla did not.

Student Boom

Yields from student inhabited buy-to-let properties are said to be lower than other categories on the market. However, the student market continues to be attractive due to the large numbers continuously entering higher education. In addition, periods where student houses are not let are rare and can be kept to a minimum.

Recent surges in student numbers have led to specialist accommodation being built to deal with the rise. Often, developers of the new property will allocate investors individual rooms or flats and ask for their money up front. Investors will then acquire a return once the rooms have been let and various costs have been deducted.

Uk top 10 BTL property areas for student investment

Properties of this kind have been developed particularly around London, with investors looking to cash in from wealthy overseas students.

Another reason for investors to enter the student buy-to-let market are that figures suggest they are least likely tenants to miss a rent payment. Around 38% of student landlords were faced with rent arrears during the last year, in comparison to 71% benefit of landlords letting to benefit recipients. [1]

Size doesn’t matter

Lawrence Hall, spokesman for Zoopla, said that the figures proved that size was not important when looking for value on an investment. On the report, Hall said, ‘The largest number of students or most prestigious university clearly isn’t necessarily best for investment returns. Landlords need to do their research and take into account the student demand, property supply, average property values and average monthly rents.’[1]

Hall said that the lack of country divide was also interesting, saying, ‘There is no apparent North/South divide when it comes to student buy-to-let investments and a number of towns in the North are showing higher gross yields than the South as a result of property values having remained lower over the past few years whilst rental demand has increased.’[1]

[1] http://www.landlordexpert.co.uk/2013/10/04/the-uks-top-10-areas-for-student-by-to-let-property-investment/