Buy-to-let in London: the results are in and these university areas get top marks for return on investment

For parents considering buying a property for the three-year stint, a new study of the capital’s top 12 universities reveals which present the best deals for buyers compared with renting.

With A-level results due on Thursday morning, tens of thousands of teenagers will soon learn if they have a place at one of London’s universities.

For parents considering buying a property for the three-year stint, a new study of the capital’s top 12 universities reveals which present the best deals for buyers compared with renting.

Parents of freshers arriving at the London School of Economics get the worst news, according to the research from Chestertons.

The estate agent found that the average cost of a nearby property in Islington, location of the LSE’s main campus, is £646,180 — making it one of the most expensive options. However, hanging on to a property could produce a profit. The area has seen an impressive 45 per cent price growth in just three years.

Renting a room near the campus would cost an average £159 a week — more than £8,000 a year or £24,000 for a typical three-year degree. The study assumes that the student whose parents have shelled out for a property for them to live in while at university not only saves this money, but would be able to rent any spare rooms to friends.

Another important factor is that LSE students command an average salary of £29,968 within a year of graduating, more than any of the other universities surveyed.

Queen Mary, University of London in Tower Hamlets took joint second place. Average local prices are lower at £426,684, up 47 per cent between 2013 and this year. Weekly rent is £147, almost as high as Islington, but on graduating the average salary is £23,961.

Students at Goldsmiths, University of London in Lewisham, which tied with Queen Mary, would need to raise £357,304 for a property in the borough, where prices have shot up 64 per cent in the last three years. Weekly rent is an average £102 but the average graduating salary is only £25,000.

Caspar Bell, research analyst at Chestertons, says: “Three or four years at a top university is an expensive business, with the costs of tuition fees adding tens of thousands of pounds. When you factor in the cost of living in London, that figure could easily more than double.

“For students with families willing to invest it makes sense to buy, saving money on rent, making a capital growth, and additionally getting some income from the spare room.

“Raising a deposit may be tricky for some but there are Help to Buy savings products and shared-ownership schemes that undergraduate investors could qualify for. With low mortgages rates, too, it really is worth considering buying a property to live in as opposed to renting. Our calculations may also prove helpful to investors looking to capitalise on the student rental market, as it shows entry costs ranked against rental yields, and is a useful guide as to likely demand from student tenants and price growth over time.”

Chestertons also carried out the study UK-wide, and found that Edinburgh, Bristol and Brighton were Britain’s “most investable” university towns, beating Oxford and Cambridge into fifth and seventh place respectively.


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