There is a trend for buy-to-let investors to buy property in university towns because expected rental yields can be high.

According to estate agents Countrywide, during the last five years, students living in privately rented accommodation has risen by 11,000. Southampton had the largest growth of 3,428, Liverpool grew by 2,500, and Leicester by 2,075, with these figures mentioned in a June 2017 FT.com article.

Although some university cities have seen a drop in the number of students requiring privately rented accommodation, university towns where there is a growth in the student population are being targeted by buy-to-let investors. Rental yields from student accommodation can be 2% to 3% more than from standard buy-to-let investments.

Johnny Morris, Head of Research at Countrywide, said:

“Yields in buy-to-let have declined as house prices have grown and one of the few ways of increasing your yield is increasing your income. Looking at the student market can do that.”

The downside to letting student accommodation is that tenant turnover is high and maintenance costs for multiple occupancy houses can be more than houses rented to families.

Landlords have recently been faced with extra costs from increased stamp duty and cuts to tax relief on commercial mortgage interest payments. House prices in London and other major cities have risen sharply. These factors have slowed down the buy-to-let market in many areas. Landlords are looking at regions with higher than average rental yields. Student accommodation in university towns can provide the increased yields that landlords are searching for.