Stoke-on-Trent tops list of lucrative student housing markets for landlords

Stoke-on-Trent has emerged as the most profitable location for buy-to-let landlords in the UK’s student housing market, according to recent data.

The Staffordshire city, home to Staffordshire University and within proximity to Keele University, offers landlords an impressive average annual yield of 9.43%.

This finding comes as the student housing sector continues to show resilience and growth, with yields across the UK rising from 6.12% in July 2022 to 7.04% in July 2024.

The Stoke-on-Trent success story

With average house prices just shy of £147,000 and annual rental incomes reaching £13,900, Stoke-on-Trent presents an attractive proposition for property investors.

The city’s success is attributed to its affordability and the steady demand from students attending nearby universities.

Louisa Sedgwick, Paragon Bank’s managing director of mortgages, commented on the appeal of student properties:

“Student property remains a popular choice for portfolio landlords because they can typically achieve higher yields than standard buy-to-let property. They also benefit from parental guarantees, so arrears are typically lower.”

Russell group universities drive high yields

The data reveals a clear trend towards properties near prestigious institutions.

Of the top 15 yielding university towns and cities, 13 have a Russell Group university. This group of 24 research-intensive universities seems to be a key factor in driving rental demand and, consequently, yields.

Liverpool’s student postcodes secured the second spot with yields of 8.93%, while Edinburgh followed closely at 8.23%.

Sedgwick noted, “The stronger performing locations based on our lending data shows that there's a gravitation towards quality universities, with 13 of the top 15 locations boasting a Russell Group institution.”

The future of student housing investment

As the demand for university places is forecast to rise in the coming years, experts predict a corresponding increase in the need for student accommodation.

Neil Smith, Paragon Bank’s head of surveyors, offered insights into the market dynamics:

“Portfolio landlords usually have in-depth knowledge of local student markets to the point where they know the prime local areas and even the favoured roads that provide a strong sustainable student rental demand.”

Smith added:

“With demand for university places forecast to rise over the next few years, there will be greater need for student accommodation. Some of this will be met by Purpose Built Student Accommodation, but the traditional student property provided by private landlords will remain very much part of the mix.”

This positive outlook suggests that despite the growth of purpose-built student accommodation, private landlords will continue to play a crucial role in meeting the housing needs of the UK's student population.

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