Nottingham has been named as one of the top university cities for buy-to-let investment in the UK, while London fails to make the list.
According to research by Property Partner, landlords can earn rental returns of up to 6.9% when investing in buy-to-let property in university cities, but only if they are savvy about where to buy.
The study ranks Nottingham as the ninth best university city to invest in, ahead of Coventry, Leeds and London.
Six of the worst university cities for rental returns are in the capital, with Imperial College London, in Kensington and Chelsea, ranked as the lowest yielding area, offering returns of just 1.3%.
The top ten university towns/cities for buy-to-let are:
|Position||Town/city||Median rent pcm||Average house price||Average gross annual yield|
|8||Newcastle & Northumbria||£823||£150,609||6.6%|
According to Multi-Let, a market-leading House in Multiple Occupation (HMO) investment and management firm, a combination of low property prices and strong demand for rental accommodation in Nottingham means that landlords are making around 6.5% on average from a standard buy-to-let.
The Managing Director of Multi-Let, Daniel Hill, comments: “Nottingham has a thriving university, which is attracting a high number of international students. The University of Nottingham, described by The Sunday Times University Guide 2014 as “one of the first to embrace a truly international approach to higher education”, has award-winning campuses in the United Kingdom, China and Malaysia, and hosts a truly global academic community in all three countries. The University of Nottingham is placed 77th in the world and in the top 1% of universities internationally by the latest (2014) QS World University Rankings.
“Over the last 12 months, we have seen a surge in developer supply for purpose-built student accommodation in Nottingham, up by over 30% a year from 2015. Nottingham provides investors with a great return from standard buy-to-let properties and HMOs. This has provided huge opportunity for sophisticated investors looking to reposition stock from the student market and into that of the graduate and young professionals.”
He continues: “If landlords want to increase their yields, they should consider investing in ex-student HMOs. For example, a three-bedroomed, single let property in Nottingham may typically achieve a gross rent of £650 per calendar month (pcm) for a family. It is usual that, once converted, the gross rent on the same property will exceed £2,000 pcm as an HMO. This represents a significant profit opportunity for buy-to-let investors who have the required local expertise to generate sustainable returns in this increasingly competitive market.
“We know that international students want high quality accommodation with a superior finish, and many are looking for either purpose-built developments or shared accommodation. Many standard properties cannot be successfully converted to HMOs, with the introduction of C4 building regulations, so you do need to know what you are doing in Nottingham. If the right stock is secured and a high quality refurbishment is undertaken, the property can attract international students who are prepared to pay more for luxury ensuites, large TVs, premium kitchen appliances and furnishings.”
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