University cities in Scotland provide the best areas in the UK for profit for buy-to-let investors, according to research from property website Zoopla.
Its research found that Edinburgh offers buy-to-let landlords an average rental yield of 6.11%, the best in Britain. Meanwhile, Aberdeen, was third in the buy-to-let investment league table, with an average yield of 5.66%.
Dundee, birthplace of Dundee University, came fourth, posting a 5.11% average yield. Glasgow – place of Nicola Sturgeon’s alma mater, Glasgow University – achieved fifth place on the back of average yields of 5.07%. Amid the Scottish high-performers, Coventry, which gives its name to the university in the town, came in at second place, with a 6.03% average yield.
By contrast, university cities in the North of England were found to be among the worst investment opportunities for buy-to-let landlords. Middlesbrough, where the main Teesside University campus is located, recorded the lowest average rental yield in the UK – a mere 1.47%. The North Western city of Lancaster, home to Lancaster University, was the second-worst performer, with a 1.87% yield, while Lincoln University’s host city, Lincoln, posted an average yield of 2.14%, the third-lowest in the league table.
The research shows the cities hosting the very best universities are not necessarily the very best options for buy-to-let investors. Cambridge failed to make it into the top 10 of the student buy-to-let league, posting a below-par average yield of 3.65%.
London registered an underwhelming 3.97% average yield, and so also didn’t feature in the top 10. Oxford, whose university is almost a thousand years old, only managed eighth place in the league table, with an average 4.61% yield.
Across the UK, the average rental yield on a typical four-bedroom property is now 3.92%.
Lawrence Hall of Zoopla said: “Scottish university cities are currently offering fantastic returns for UK landlords. Many Scottish universities are now internationally renowned, with thriving undergraduate and graduate environments. This means demand for rental accommodation in university areas is very high, as throngs of students compete to live near their campuses. Combined with Scottish house prices still remaining relatively low, this equates to excellent yields.
“Some may be surprised that the golden triangle of London, Oxford and Cambridge are not producing higher yields. However, given those areas have a pedigree of high property prices, buy-to-let investors there would likely spend a higher proportion of rental income paying off their properties’ mortgages than their counterparts north of the border.”