Since the Government introduced a range of measures to get the UK property market back on its feet after the onset of the Covid-19 pandemic in 2020 (such as the reduction to stamp duty rates and a mortgage guarantee scheme backing high loan to value (LTV) mortgages), property purchases and prices have gone through the roof. Homebuyers and investors alike are putting their money into bricks and mortar as a safe bet amidst the on-going economic uncertainty we are experiencing in the wake of the pandemic and the fall out from Brexit.
Whilst taking on a buy-to-let property can come with risks in terms of ensuring you are able to cover your mortgage repayments and are not left with a vacant property which is costing you money, savvy investors have long seen the potential of buy-to-let properties aimed at student tenants. The pandemic clearly hasn’t put off potential students either, with a 40% increase in the number of 18-year-olds submitting university applications in the UK in 2020 (and a 10% increase in applications from international students). There has also been a rise in students seeking out a better quality of accommodation and more independence than the standard on-campus student flats can typically offer.
Having a consistent pool of tenants to draw from is certainly a bonus, but you also need to ensure that you are seeing a healthy return on your investment, decent rental yields and house prices which won’t see you paying over the odds for the property in the first place, affecting your bottom line.
When it comes to an ideal spot for student buy-to-let properties, Manchester in the northwest of England certainly fits the bill. With an average rental yield of 5.45% (one of the highest of all UK cities) and high capital growth expectations for average house prices (+28.8% by 2025) the city’s property market is certainly one to watch.
Manchester also has an impressive pool of potential tenants on offer since it is home to five universities: The University of Manchester, Manchester Metropolitan University, The University of Salford, The University of Bolton and University Academy 92. All of which offer an extensive range of undergraduate, post graduate and business courses to over 100,000 students annually. The city is a mecca for international students too, who are drawn to its culturally diverse landscape with around 200 different languages spoken across the city on any given day.
Prospective students are also drawn to Manchester’s excellent amenities like the Trafford Centre retail complex, the Manchester Arena (Europe’s biggest indoor arena) and numerous galleries, museums and theatre spaces, extensive leisure facilities such as the Manchester Aquatics Centre, the Manchester Regional Hockey Centre and the Manchester Boxing Centre of Excellence plus great outdoor space including Heaton Park, Alexandra Park and the nearby Peak District National Park, not to mention a plethora of festivals, live music and a buzzing nightlife! The vibrant club and pub scene covers exciting entertainment venues like Printworks, cosy, traditional pubs like the Kings Arms and Marble Arch and vibrant cocktail bars like Lola Lo. So it will come as little surprise then to hear that the city was also voted in at number 15 of the top 48 cities in the world by student bible Time Out.
When it comes to somewhere to call home, sought-after suburban hotspots like Sale, Bowden, Hale, Altrincham and Didsbury might come with an expensive price tag aimed more at professionals, families and retirees, but popular student areas such as Fallowfield, Rusholme and Hulme offer a lot more for your money. More broadly, the M3 (city centre) and M6 areas offer the best rental yields (of around 7.89% in some cases) whilst the M5 and M6 postcodes near the University of Salford and areas to the south of the city centre can offer more affordable property prices.
The average property prices in student hotspots Rusholme, Hulme and Fallowfield were £163,232, £170,026 and £199,527 respectively over the last 12 months. Significantly less than the national average (£255,000), the average for Manchester (£286,559) and the Greater Manchester region (£250,609) overall. There are also a great range of property options in the city from Victorian, Edwardian and inter war period properties to more modern developments and apartment complexes.