Student let hotspots are climbing the table of the top yielding locations for buy-to-let investment in the country, according to the latest Buy-to-Let Yield Survey from TotallyMoney.
Despite increasing pressure on diminishing margins, the report shows that landlords can still achieve rental yields in excess of 12% in the best postcode areas.
The autumn/winter 2017 Buy-to-Let Yield Survey names Liverpool’s L7 postcode as the top area for rental yields. A combination of lower than average house prices and relatively high rent costs, driven by strong demand, has contributed to the postcode’s 12.63% average yield.
The survey analysed more than 500,000 properties in 2,700 postcodes across England, Wales and Scotland. The Merseyside powerhouse picked up all three of the top positions.
Manchester, Nottingham, Sheffield, Glasgow, Cardiff and Plymouth – all student let hotspots with large university bodies in need of affordable accommodation – also placed highly in the top 25 postcodes, delivering average rental yields in excess of 7.25%.
It was Liverpool’s L7 that remained in the top spot, however. This postcode covers the city centre, Edge Hill, Fairfield and Kensington, while its proximity to two of Liverpool’s three universities make it a top student let hotspot. Liverpool postcodes also dominate the top 25 places in the table, taking up eight spots.
Home to the University of Plymouth, the PL4 postcode soars up the table, from 15th to 4th, with an average rental yield of 10.15%.
Middlesbrough’s TS1 postcode is home to Teeside University and makes the top five, with an average yield of 10.06% and a typical house price of just £64,500.
With four universities and a student population of 100,000, the Manchester rental market is strong. The city boasts two of the highest average yields in the study, with 8.25% in the M6 postcode and 7.98% for M14 – a student let hotspot and home of the University of Manchester’s Fallowfield Campus.
Two Scottish postcodes make it into the top 25 – Glasgow’s G3, covering Anderston, Finnieston, Garnethill, Park, Woodlands and Yorkhill, and Aberdeen’s AB11, encompassing the city centre and Torry.
No postcodes in London or the Home Counties make it into the top 25, while central London postcodes account for eight of the bottom 25 areas.
Joe Gardiner, the Head of Brand and Communications at TotallyMoney, comments: “Realising a decent return on a buy-to-let rental property is becoming increasingly difficult. Property prices continue to rise steadily, albeit more slowly, and rule changes have made lenders more cautious.
“Prospective landlords need to go into property investment armed with the facts: they need to be on top of their credit report, compare the market for the best buy-to-let mortgage rates and focus on property investment in areas that can give them the highest yield.”
He adds: “The buy-to-let hotspots postcode map pinpoints postcodes and gives landlords a solid steer towards the opportunities that university city student lets offer.”
Does the report make you consider an investment in one of these student let hotspots?