Stoke-on-Trent has emerged as the top university town for landlords seeking lucrative rental returns, according to a detailed analysis from Paragon Bank. The findings reveal that landlords catering to students in this bustling academic hub are reaping some of the highest rental yields in the UK.

For those providing accommodations for students attending Staffordshire University and Keele University, the average yield over the past two academic years hit an impressive 9.43%. This figure is based on rental offer data collected during that period. In terms of monetary gains, landlords in Stoke’s student-heavy areas earned an annual rental income of £13,860, with the typical student property priced at £146,944.

Not far behind, Liverpool’s student postcodes secured the second-highest yields at 8.93%, with Edinburgh following closely with a yield of 8.23%. York also posted strong numbers, achieving an 8.12% yield. Rounding out the top five is Coventry, home to Warwick University and the University of Coventry, where student property postcodes yielded 8.08%.

Interestingly, many of the cities dominating the rankings are home to Russell Group universities. The Russell Group is composed of 24 elite, research-intensive institutions, known globally for academic excellence. Of these, 13 institutions are situated in towns or cities that made the top 15 list for student rental yields.

Across the UK, student rental postcodes delivered an overall yield of 7.04% as of July 2024. This marks a notable increase from 6.12% two years ago, signalling a growing trend in the profitability of student rentals.

“Student property remains a popular choice for portfolio landlords because they can typically achieve higher yields than standard buy-to-let property,” said Louisa Sedgwick, managing director of mortgages at Paragon Bank. She further explained that landlords benefit from the security of parental guarantees, which helps keep arrears lower compared to traditional rental properties.

Sedgwick also highlighted the trend toward prestigious institutions, noting, “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.”

Neil Smith, head of surveyors at Paragon Bank, shed light on the advantages experienced by seasoned portfolio landlords. “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,” he stated.

Looking ahead, Smith pointed out that rising university enrolment figures will inevitably push demand for student housing even higher. "With demand for university places forecast to rise over the next few years, there will be greater need for student accommodation,” he explained. While some of this demand will be met by Purpose Built Student Accommodation (PBSA), Smith reassured that “the traditional student property provided by private landlords will remain very much part of the mix.”