League table claims student accommodation gives up to 12% yield

A league table drawn up by a rental sector insurance specialist claims private rental accommodation in university locations can produce yields up to 12 per cent per year. 

Simple Landlords Insurance says it took the major universities as lised by the Complete University Guide and examined investment potential in each location. St Andrews hit the top spot with the chance to earn up to a 12 per cent, followed by Lancaster, Loughborough and Birmingham with the potential to achieve a yield of more than 10 per cent for a student accommodation landlord. 

Exeter, Durham, Sussex and Nottingham also perform strongly, with yields in excess of 9.5 per cent per year.

“Unlike other studies, ours centred in on the 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” says a spokesman for the insurance company.

The research looked at Largo Road, in St Andrews, where fairly large houses cost an average of £300,000 and five students paying £150 a week each could earn a collective £36,000 a year in rent for a landlord.

Meanwhile, Oxford offered the lowest value of the universities covered by the study. Properties in popular student area Iffley Road change hands for about £720,000, and could net a yield of 3.33 per cent, or £2,000 a month. That makes the high initial outlay look steep, with much less lucrative returns.

The University of East Anglia in Norwich, and Cambridge, Bristol and Surrey universities all feature towards the bottom of the table.

“One way to mitigate the risk is to invest in an area you know for a student you know – and we’re seeing more people with children at university choosing to invest and buy a property rather than see rent going down the drain” says the spokesman.