Lower-cost university locations are producing some of the strongest gross rental yields for student landlords, with Middlesbrough recording an average of 24.3%, according to Accommodation for Students.

The analysis found a marked gap between potential returns in relatively affordable markets and those available in some of England’s more expensive university cities.

Hull ranked second with an average gross advertised yield of 12.8%, followed by Wolverhampton at 11.9%, Plymouth at 11.8% and Stoke-on-Trent at 11.7%.

Middlesbrough, Stoke-on-Trent and Hull had also featured among the cheapest student rental locations in previous research by Accommodation for Students. Average advertised rents stood at £103 per person per week in Middlesbrough and Stoke-on-Trent, and £107 in Hull.

Across England and Wales, the average gross advertised student rental yield was 8.4%. The study covered 22,107 privately marketed student properties across 61 cities and 312 named student areas.

PROPERTY PRICES DRIVE REGIONAL DIFFERENCES

Accommodation for Students calculated that Middlesbrough properties generated average advertised annual rental income of £24,326 against an average local property value of £100,019, giving a gross yield of 24.3%.

The figures illustrate the effect of property values on returns. In London, average advertised annual rental income was higher at £36,166, but an average property value of £697,910 reduced the gross yield to 5.2%.

Northampton recorded an average gross yield of 11.4%, followed by Liverpool at 11.3%, Durham at 11.2%, Lancaster at 10.8% and Gloucester at 10.1%.

At the other end of the table, Kingston had the lowest ranked yield at 4.5%. Bedford recorded 5.0%, Canterbury 5.5%, Guildford and Cheltenham 5.8%, and Oxford 5.9%.

LARGER FLATS LEAD BY PROPERTY TYPE

The research also found substantial differences according to the size and type of student accommodation. Flats with three or more bedrooms produced the highest average gross yield, at 12.5%, based on annual advertised rental income of £30,753 and an average property value of £246,386.

Houses with six or more bedrooms averaged 9.4%, while three and four-bedroom houses returned 8.4%. Houses with one or two bedrooms produced an average of 5.2%.

Five-bedroom houses averaged 7.0%, while two-bedroom flats returned 8.9%, studios 8.5% and one-bedroom flats 7.4%.

Performance by property type also differed between locations. Hull recorded the highest ranked yield for one and two-bedroom houses at 11.9%, while Middlesbrough led for three and four-bedroom houses at 24.3%.

Nottingham topped the ranking for houses with six or more bedrooms at 10.6%. Preston led the one and two-bedroom flat categories, while Newcastle recorded the highest ranked yield for flats with three or more bedrooms at 13.1%.

Simon Thompson, managing director of Accommodation for Students, comments: “What is particularly interesting is that several of the locations producing the strongest gross yields are also among the more affordable places for students to rent. Middlesbrough, Hull and Stoke-on-Trent all appeared near the top of our affordability research and now feature among the five highest-yielding markets.

“That balance is really important because a healthy student rental market needs to work for both sides. Students need good-quality homes at prices they can afford, while landlords need sufficient returns to justify continuing to provide them.

“The findings also show why landlords cannot look at either rent or purchase price in isolation. Some of the highest student rents are found in more expensive university cities, but that does not necessarily translate into a stronger yield.

“Nor is there a single type of student property that will work everywhere. Larger shared houses and flats can generate more rental income, but they may also bring higher purchasing, management, maintenance and regulatory costs.

“Gross yield is an important starting point, but it is not the same as profit. Landlords still need to consider achievable rents, local student demand, void periods, licensing, finance and running costs before deciding whether an individual property represents a sound investment.”