Study reveals the best cities in England and Wales to invest in student properties

  • Derby is one of the best places in England and Wales to invest in student properties, with 20,955 students currently studying in the city and properties offering potential rental yields of 5.34%
  • Nottingham has the highest percentage of student accommodation of any city in England and Wales, with 11.79% of all housing catered toward students
  • Expert provides top tips for how student lettings landlords can stand out in a crowded market

1.4 million students are currently vying for accommodation in university cities and towns across the UK. With student housing in perpetually short supply, university towns can offer smart investment opportunities for buy-to-let landlords. But, which cities are the best for landlords looking to purchase student accommodation?

To find out, digital mortgage lender Molo has analysed 24 university cities and towns across England and Wales, looking at a range of metrics including average monthly rent, property purchase price, the number of students, the number of properties in council classes ‘M’ and ‘N’, and the percentage of student properties in each city. The study has also taken into account gross rental yields, which were calculated using internal data.

To view the full research, please visit: https://molofinance.com/hub/buy-to-let/top-university-cities-where-buy-to-let-demand-is-strong/

Derby is one of the best places in England and Wales to invest in student properties, with 20,955 students currently studying in the city and properties  offering potential rental yields of 5.34%

Taking the crown as the top place to invest in student accommodation is Derby. Home to the University of Derby, 20,955 students live in the city, making up just under 3% of the population.

Currently, only 1.67% of all properties in the city are catered toward students, which means there is a potential gap in the market here for landlords looking to purchase student housing. Landlords could also see significant return on investment in the city with rental yields in sitting around 5.34%, higher than the national average of 4.98%.

In second place is Hatfield, which is the main base of the University of Hertfordshire. Located just 40 minutes from London, the town is home to 31,940 students. Hatfield is another location that perhaps offers a less-crowded student housing market, as just 2.47% of all properties in the city are currently student lets.

Rounding off the top three best cities for investing in student housing is Preston. 28,325 students attend the University of Central Lancashire in the city, and average gross rental yields are even higher here than in Derby or Hatfield, at 5.41%.

Rank City Gross yield No. of students per city Combined no. of properties in council class M and N % of student properties in each city
1 Derby 5.34% 20,955 1,894 1.67%
2 Hatfield 4.38% 31,940 1,246 2.47%
3 Preston 5.41% 28,325 1,793 2.62%
4 Reading 4.53% 19,390 1,932 2.52%
5 Durham 6.67% 22,230 5,280 2.08%

Nottingham has the highest percentage of student accommodation in any city studied, with 11.79% of all housing catered toward students 

The study has also looked at which cities across England and Wales have the highest proportion of student accommodation, to determine where landlords might find themselves competing in a crowded market.

In first place is Nottingham, with 11.79% of all housing in the city made up of student properties. However, given the city has the third largest student population and is home to 78,725 students across two large universities, Nottingham Trent and the University of Nottingham, landlords should still see plenty of tenant demand in the city.

Exeter follows closely behind in second, with 10.99% of properties in the city catered towards students. With 9.33% of its housing market made up of student accommodation, Oxford rounds off the three cities with the highest proportion of student housing.

Rank City % of student accommodation
1 Nottingham 11.79%
2 Exeter 10.99%
3 Oxford 9.33%
4 Newcastle 8.34%
5 Leicester 7.13%

On how landlords can stand out from the crowd, VP of Strategy at Molo, Mark Michaelides says, “For many landlords, student housing tends to see pretty stable demand, as there is almost always a healthy appetite for rentals in university towns and cities. However, given how crowded the market can also be, it’s important that landlords are differentiating their offerings, to make sure they’re able to attract (and retain) good tenants year after year.

“Making properties stand out to students often hinges on small touches, such as offering fast, reliable internet and perhaps including bills in the rent. Things like bike storage or parking space may also be attractive.

“Landlords looking to thrive in competitive cities should consider what they can do around the property as well, whether it’s installing premium fixtures, smart home tech like digital door locks, or eco upgrades such as solar panels. Outdoor enhancements, such as barbeques and furniture, could also entice tenants.

“Ultimately, diversifying a student rental can help you command attention and maximise rental yields, even with properties in popular but crowded markets.”

For more information please visit: https://molofinance.com/hub/buy-to-let/top-university-cities-where-buy-to-let-demand-is-strong/