Middlesbrough has emerged as the highest-yielding student property market in England and Wales with a potential gross return of 24.3%, new analysis reveals.
Accommodation for Students finds some of the cheapest locations for student tenants are simultaneously producing the strongest advertised yields for landlords.
Middlesbrough is followed by Hull at 12.8%, Wolverhampton at 11.9%, Plymouth at 11.8% and Stoke-on-Trent at 11.7%.
The findings are based on 22,107 privately marketed student properties across 61 cities and 312 named student areas, with the average gross advertised yield across England and Wales standing at 8.4%.
AFFORDABLE MARKETS
Middlesbrough, Hull and Stoke-on-Trent have previously appeared among the cheapest student rental locations in Accommodation for Students’ research.
Students in Middlesbrough and Stoke-on-Trent face average advertised rents of £103 per person per week, while Hull averages £107.
Lower property values help explain the potential landlord returns.
In Middlesbrough, average advertised annual rental income of £24,326 is compared with an average property value of £100,019, generating the 24.3% gross advertised yield.
At the other end of the market, London properties generate substantially more rental income at an average £36,166 a year. But an average property value of £697,910 reduces the gross advertised yield to 5.2%.
Kingston records the lowest yield in the rankings at 4.5%, followed by Bedford at 5.0% and London.
PROPERTY TYPE MATTERS
The research also finds substantial differences according to property size and type.
Flats with three or more bedrooms produce the highest average gross yield at 12.5%, based on annual advertised rental income of £30,753 and an average property value of £246,386.
Houses with six or more bedrooms average 9.4%, compared with 8.4% for three and four-bedroom houses.
One and two-bedroom houses return the lowest average yield among the property types examined at 5.2%.
Simon Thompson, Managing Director of Accommodation for Students, says: “What is particularly interesting is that several of the locations producing the strongest gross yields are also among the more affordable places for students to rent.
“Middlesbrough, Hull and Stoke-on-Trent all appeared near the top of our affordability research and now feature among the five highest-yielding markets.
“That balance is really important because a healthy student rental market needs to work for both sides. Students need good-quality homes at prices they can afford, while landlords need sufficient returns to justify continuing to provide them.”
GROSS NOT PROFIT
Thompson cautions landlords against treating headline yields as an indication of the return an individual investment will necessarily produce.
He adds: “Gross yield is an important starting point, but it is not the same as profit.
“Landlords still need to consider achievable rents, local student demand, void periods, licensing, finance and running costs before deciding whether an individual property represents a sound investment.”
Read the full report HERE.
