It's fair to say that the sector as a whole has been on shaky ground following the first national lockdown in March that closed universities and prompted thousands of students to vacate their accommodation.
However, for investors in student accommodation, there remains a glimmer of hope as demand for higher education and suitable digs is as high as ever. So where should they be looking to invest?
Student accommodation platform, UniHomes, has revealed which universities currently offer the best option for landlords in the student sector by analysing market data around the top 50 UK universities to find which offer the most profitable buy-to-let investment based on the current average rental yield in each university postcode.
The figures show that the University of Southampton is the UK’s best buy-to-let university at present. Located in the SO17 postcode, the area is home to an average house price of £226,489 while the current average rent sits at £1,388 per month. As a result, a buy-to-let in the university’s postcode currently offers an average rental yield of 7.4%.
Nottingham is the second-best bet for a profitable bricks and mortar investment in the buy-to-let sector. The University of Nottingham’s NG7 postcode is home to an average rental yield of 7%, while Nottingham Trent’s NG1 postcode comes in slightly lower at 6.7%.
The NE1 postcode, home to Newcastle University, also ranks within the top five with an average yield of 6.3%, along with the University of Dundee (6%).
The Universities of Cardiff (5.9%), Leicester (5.9%), Strathclyde (5.8%), Kent (5.8%) and Warwick (5.7%) also make the top 10 best buy-to-let universities.
Phil Greaves, Co-Founder of UniHomes, commented: “It’s no secret that the profitability of the buy-to-let sector has been hit hard by a string of legislative changes, particularly reductions on tax relief and an increase in stamp duty. With many also financially impacted due to the current pandemic, many landlords have also seen their level of rental income impacted.
"However, the good news is that despite the current landscape, demand for higher education and student accommodation remains high, as many persist with their study plans with an eye on life after the pandemic.
"As a result, the student accommodation sector has continued to provide a consistent level of demand for many landlords, allowing them to avoid any lengthy void periods. In addition, many students finance their living arrangements via a student loan and so they don’t present the financial unpredictability that many are experiencing in the regular rental market at present.
"Of course, it’s still important to research other influential factors such as the yields available to ensure your investment is as profitable as it can be.”
