New research carried out on achievable yields through UK student accommodation showed St Andrews coming out top with 12% per year.
Simple Landlords Insurance drew up a league table to show that it was possible to achieve high yields through renting to student tenants. A spokesperson for the company stated: “Unlike other studies, ours centred in on 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.”
Largo Road in St Andrews was used in the study, where the large houses cost on average £300k. Five rooms can be rented out for £150 per week in this street, enabling this level of yield and earning the landlord an annual total of £36k.
Top of the class
Other UK cities in the top 4 of the research were Lancaster, Loughborough and Birmingham where landlords could achieve over 10% yield in rental income through student accommodation.
Edinburgh based Grant Property who specialise in investment and letting throughout the country, state that student cities Dundee, Stirling and Aberdeen can command rental yields of 7%, and Edinburgh and Glasgow at 6%. University cities often have more than one university and are constantly growing in size, offering landlords more security for renting their property. In fact Peter Grant, founder of Grant Property, believes that the student market makes up more than 50% of the rental market.
Lower risk for landlords
Renting to students often involves a joint lease and/or guarantors, again making it a safer investment for landlords. If one student falls behind with a rent payment, the landlord is able to pursue all the tenants within the property and/or the guarantor making it easier for the landlord to recover the rent.
The combination of renting to a group of students and lower property prices means certain university cities can offer the opportunity of higher yields than other cities in the UK. Demand for student accommodation remains high as students compete for flats and houses close to the university campuses.