If you are looking at buying-to-let in university towns you are moving in the right direction, Arthur takes a look at the locations that give the best returns.
Strong demand for properties in university towns combined with a letting period of around 1 year, means that landlords for student housing don’t have to stress about finding new occupants. Running at full capacity with fewer vacant rooms means you will be earning high yields if running a HMO, if you are buying in the right location. Those running HMO’s for those other than students may set a contract period of 3/6 months to give the tenant flexibility, but this could result in high turnaround which can make rental income uncertain.
Simple Landlords Insurance published a league table stating which university towns will deliver the greatest returns. The university town where the future King of England studied, St Andrews, has ranked top in the listing. A large 6 bedroom house can be purchased for around £300,000 and with each tenant paying on average £600 a month, annual returns in this case are £36,000- a 12% annum return. Lancaster, Loughborough and Birmingham follow in the top 5 places to buy-to-let. Lowest return on investment has been found in Oxford, where properties on Iffley Road mainly occupied by students, on average cost £720,000 which offers a poor 3.3% annum return.
When aiming to achieve these high yields, you must look into the standards desired by students who are willing to pay within the price bracket of approximately £600 a month, for instance they require multiple plug points, high quality furnishings and overall clean and well equipped finish. Modern facilities are increasingly important and they must meet all required structural work to comply with housing, health & safety standards. These include securely fitted fire alarms, not having sinks fittings next to the cooker and having smart meters installed.
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