In the last few weeks, an estimated 275,000 new students have headed off to university for the first time. There are more than two million students in higher education in the UK and so demand for high quality accommodation in university towns and cities has never been greater.
So, if you’re thinking of investing in property or buying a home for your child when they go off to study, a university town can be a real property hotspot.
Keep reading to discover the ten best university cities for buying property. We also highlight an innovative new mortgage product designed to help parents support their children onto the housing ladder and through university.
The top 10 university locations to buy a property
With a huge demand for homes, it’s no surprise that university towns and cities offer some of the highest buy-to-let rental yields in the country.
Credit report provider TotallyMoney surveyed over 580,000 properties across Britain to rank postcodes in order of highest buy-to-let yields to the lowest.
The study revealed that that Nottingham, which has a student population of over 37,000, is one of the best places in the UK to invest with two postcodes featuring in the top five.
The NG1 postcode takes first place with an average rental yield of 11.99%, while NG7 takes fifth place with an average yield of 8.89%. The study also found that property prices are affordable, averaging £152,631 and £160,269 respectively — far below the UK average of £226,906.
Liverpool was also highlighted as a good place to buy and also boasted two postcodes in the top five.
The full top 10 places to buy ranked by rental yield are:
1. Nottingham (NG1) – 11.99%
2. Liverpool (L7) – 9.79%
3. Middlesbrough (TS1) – 9.45%
4. Liverpool (L1) – 9.33%
5. Nottingham (NG7) – 8.89%
6. Newcastle-upon-Tyne (NE6) – 8.43%
7. Newcastle-upon-Tyne (NE1) – 8.16%
8. Sheffield (S2) – 8.16%
9. Southend-on-Sea (SS1) – 8.02%
10. Bradford (BD1) – 8.00%
TotallyMoney’s Mark Moloney says: “With students flocking to university cities year after year and looking for a place to live, it’s no surprise the student market is a dependable one for landlords.
“Since so many students are looking for accommodation, landlords may use this as an opportunity to drum up competition between them."
Building society launches innovative ‘Buy for Uni mortgage’
It’s not just landlords that are snapping up homes in university towns in order to let them to local students. Increasingly, parents are helping their children out by buying a property where their son or daughter can live during their studies.
According to SpareRoom, the average cost of renting a room is now £603 a month. So, by living rent-free in a property owned by their parents, a student would save £21,708 over the course of a three-year degree.
However, the amount you would have to pay to buy your child a home for university – and how much you could make by renting the other rooms in the property – varies markedly across the country as we saw above.
Now, a leading building society has launched an innovative new ‘Buy for Uni mortgage’ to support students onto the housing ladder and through university.
The Vernon Building Society product enables parents to help their children buy a home without having to directly fund a deposit, by becoming a joint borrower on the mortgage and providing supporting security on any mortgage amount over 80% of the property value. Parents can do this either through a charge against their own property or a cash deposit (which will earn interest).
The borrower owns the property in their sole name and the parent is not on the title deeds (therefore isn’t liable for Stamp Duty Land Tax).
This scheme means that a student doesn’t need to spend thousands of pounds on rent over the course of their degree. Instead they can generate rental income from spare rooms to help cover their mortgage repayments – and choose their housemates.
The Vernon hybrid buy-to-let and guarantor-style mortgage product is a five-year discounted rate at a current best buy of 4.70%, available up to 100% of the property’s value.
In addition, the product comes with no early repayment charges.
Tom Gurrie, intermediary sales manager at Vernon, says: “Many parents want to help their children onto the ladder and ease the costs of putting them through university, and the Buy for Uni Mortgage lets them do both. Instead of paying rent to a student landlord, the student becomes the landlord, receiving rental income that helps cover their mortgage repayments, while having a secure home for the duration of their degree course, or beyond.
“And with a flexible range of onward options, they can relocate, stay put or sell up without any Early Repayment Charges. This flexible, forward-looking mortgage product helps parents to give their children an invaluable leg-up on to the ladder.”