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Single university towns deliver highest student rental yield

Smaller university towns offer the best returns on student rental accommodation, according to a recent survey.

The report, from Paragon Bank, reveals that seven of the top 10 are towns or cities with just one university deliver the best yield, and Swansea tops the list with an average yield of 9.56 per cent for student property.

The city has one main university, Swansea University, which has a population of more than 20,000 students. Data analysed over a two-year period in the city saw the average rental income of £22,140 generate a yield of 9.56 per cent against the average purchase price of £231,534.

According to the survey, one reason for smaller towns and cities faring particularly well could be that they will typically have a lower proportion of purpose-built student accommodation.

Towns with more traditional accommodation, such as Salford and Huddersfield, with yields of 7.53 per cent and 7.40 per cent respectively, have many houses in multiple occupation (HMO), and property is generally more affordable to purchase, helping to generate better returns.

These smaller locations have smaller student populations, usually less than 25,000.

Swansea was followed by Hull, another single university town with a student population of just over 14,000 students, returning a yield of 8.68 per cent.

The city with two more universities that yielded the highest percentage was Liverpool with an 8.25 per cent yield. The other two cities are Leeds and Coventry.

Locations offering the best yield:

Town/city Yield% University and population

Swansea 9.56 per cent Swansea University – 20,375
Hull 8.68 per cent University of Hull – 14,255
Plymouth 8.41 per cent University of Plymouth – 18,410
Liverpool 8.25 per cent University of Liverpool – 29,600
John Moores University – 25,050
Coventry 8.05 per cent Coventry University – 38,430
The University of Warwick – 26,825
Chester 7.92 per cent University of Chester – 13,545
Stoke 7.86 per cent Staffordshire University – 15,675
Lincoln 7.84 per cent The University of Lincoln – 16,425
Preston 7.77 per cent University of Central Lancashire – 24,715
Leeds 7.62 per cent The University of Leeds – 36,330
Leeds Beckett University – 23,290

Richard Rowntree, Paragon Bank Managing Director for Mortgages, said: “When it comes to student property investment, heading to the major cities doesn’t always generate the best returns, as these figures demonstrate.

“Smaller towns and cities will typically have a lower proportion of purpose-built student accommodation, which has become more commonplace in major cities, whilst major cities also offer a wider array of property that students can rent, such as city centre apartments or build-to-rent schemes.

He added: “Smaller locations will often offer more traditional type student accommodation, such as houses in multiple occupation, whilst property values are generally cheaper in these locations, which can help generate better returns.”

The broader picture across the country shows that 14 of the top locations for the best yields were single university towns or cities.

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