Properties in known student postcodes generate higher average rental yields than those in non-student areas, according to analysis of Paragon Bank’s buy-to-let mortgage applications.
The lender recorded average yields of 7.32% in student postcodes, compared with 6.86% elsewhere — a gap of 0.46 percentage points.
Stoke-on-Trent led the university locations covered by the analysis, with a yield of 9.42%. Average annual rental income stood at £14,222 against an average property valuation of £150,982. The city serves the University of Staffordshire and nearby Keele University.
Plymouth ranked second at 9.27%, with average annual rental income of £35,224 and an average valuation of £379,881. Liverpool followed at 8.86%, based on annual rental income of £26,399 and a valuation of £297,951.
Portsmouth and Cardiff completed the top five, with yields of 8.31% and 8.27% respectively. Edinburgh recorded 8.23%, while Coventry, York and Leeds each exceeded 8%.
Ten of the 15 highest-yielding locations have Russell Group universities: Liverpool, Cardiff, Edinburgh, York, Leeds, Nottingham, Sheffield, Durham, Exeter and Southampton. However, neither of the two leading locations, Stoke-on-Trent and Plymouth, is home to a Russell Group institution.
Top yielding student locations
| Location | Average rental income | Average valuation | Yield |
| Stoke-on-Trent | £14,222 | £150,982 | 9.42% |
| Plymouth | £35,224 | £379,881 | 9.27% |
| Liverpool | £26,399 | £297,951 | 8.86% |
| Portsmouth | £39,215 | £472,121 | 8.31% |
| Cardiff | £32,344 | £390,983 | 8.27% |
| Edinburgh | £32,789 | £398,320 | 8.23% |
| Coventry | £28,952 | £354,858 | 8.16% |
| York | £39,360 | £484,958 | 8.12% |
| Leeds | £38,868 | £485,464 | 8.01% |
| Nottingham | £30,702 | £385,185 | 7.97% |
| Loughborough | £27,955 | £355,520 | 7.86% |
| Sheffield | £26,866 | £342,659 | 7.84% |
| Durham | £37,112 | £474,942 | 7.81% |
| Exeter | £44,659 | £579,036 | 7.71% |
| Southampton | £29,178 | £380,648 | 7.67% |
Louisa Sedgwick, managing director of mortgages at Paragon Bank, said: “As students prepare for the start of a new academic year, these figures demonstrate the strength and breadth of the university rental market.
“Cities with Russell Group universities feature prominently, reflecting the large and established student populations found in many of these locations.
“However, the strongest yields are not confined to Russell Group markets. Stoke-on-Trent and Plymouth occupy the top two positions, showing how locations with comparatively accessible property values and strong student demand can offer attractive returns.”
Sedgwick added: “Student property is a specialist market, so landlords need to understand local demand, the type and quality of accommodation students require and the responsibilities associated with managing shared homes.
“Those who approach the sector professionally can play an important role in providing good-quality homes while building a sustainable business.”
