Buy-to-let properties next to universities in Northern cities have the best performing rental yields in the UK for this year’s crop of new undergraduates, according to research by property crowdfunding platform Property Partner.
As many 18 year-olds across Britain prepare to leave home for university for the first-time, their parents will be figuring out how best to help pay the accommodation bills. One way is offsetting college costs by investing in property in the towns or cities where their children have chosen to study.
Property Partner has compiled a list of 86 university towns and cities across the UK including and Northern Ireland, ranked by net rental yield in each local property market. The cities of the North East perform best, with Sunderland topping the table (6.9 per cent net yield), alongside Middlesbrough (5.9 per cent), with Newcastle also in the top 10 (4.3 per cent).
Birmingham ranks at number three. Clustered just to the east of the city centre, the campuses of Aston and Birmingham City University offer a tantalising prospect for property investors. The average sold house price is just GBP116,732, meaning purchase costs are relatively low, while the average net yield is 4.5 per cent per year. The new High Speed 2 train terminal is set to be built right next door.
All three Greater Manchester universities make the top 10 for rental income. Parents investing for their children can expect to earn a net income of 4.4 per cent in parts of the city, and with infrastructure projects and regeneration transforming areas like Salford and Deansgate, there is potential for strong capital growth.
The picture is very different in London and the South East, where years of double-digit price rises have squeezed yields on buy-to-let property. Six of the bottom 10 ranking universities for rental income are in the capital, with Imperial College, in Kensington and Chelsea, shown to be the lowest-yielding property area surveyed (1.3 per cent net yield).
Dan Gandesha, CEO of property crowdfunding platform Property Partner, says: “In this era of ultra-low rates and high market volatility, stable investments which provide a reliable income, and medium to long-term capital growth prospects are the holy grail.
“Property is a total returns investment, and until recently, it’s been a capital returns play. But with Brexit, the rules of the game are changing. Now our investors are increasingly focussed on the reliable income they can earn, month after month.
“Property Partner enables anyone to invest in residential property all over the country, providing one-click access to grandparents, parents, and their college-age children, so they can take their view on the property market, wherever they study.”