Earlier this month, we looked at some of the best performing postcodes for student BTL investment. Here, we look at the worst-performing areas. How you use this information is up to you. They are still profitable, but margins are much lower than elsewhere. For the most part, the worst 25 are not typical university-based property. For example, one of the lowest yields is SO41 at Lymington in the New Forest, over an hour away from any of Southampton’s two universities. We have discounted anywhere more than 3-4 miles from any campus.
London Sweeps the Board
Perhaps unsurprisingly to most, London postcodes swept 3 of the lowest 8 and 8 of the top 25. We can expect some capital bias because London is so large and covers a large number of postcode zones. But due to a variety of factors, London does not represent great investment opportunities for landlords for students or the general population. The worst was N2, although it was only the second worst performing in all the country. N2 has easy access to several university campuses including London Metropolitan, and City, University of London.
Bournemouth BH13
BH13 covers Brownsea Island and the eastern side of Poole Harbour between Poole and Bournemouth. At its nearest point, it’s 3.8m miles (or 5km) from Bournemouth University Talbot Campus and a little closer to the main campus, the next postcode along from Lansdowne Campus. Some properties are rural but the urban areas possess some great harbourside views. Holiday lets mostly, but some student accommodation in this area too between the two urban areas. At just 1.41%, this is the worst-performing area for rental yield in the country.
Exeter EX8
Exeter became a Russell Group University in 2012 and has always had one of the highest rent rates for students anywhere in the country. So it may surprise you to learn that postcode EX8 to the south of the city and covering coastal town Exmouth was 7th on the list of lowest 25 yields. Granted, Exmouth is not prime student area but regular and fast transport links between the coast and city centre with two campuses just a short distance away should make this great overspill area. But EX8’s yield is just 1.91%.
Birmingham B15
You’d naturally think that Birmingham would be a great place to hold any rental property, but BL15, the postcode incorporating University of Birmingham and Birmingham Botanical Gardens is the first student property zone in the top 25 not located in the south. There are worse-performing areas for Birmingham, notably West Bromwich, but there are no university campuses nearby. This postcode is prime student rental area but yields are as low as 1.96% at present. Landlords looking to invest in Birmingham should look elsewhere.