See which university cities are the top for buy-to-let investors

UNIVERSITY cities Glasgow, Hull and Manchester have been named as the country’s top buy-to-let hot spots for landlords looking to invest in student properties.
Low house prices in Glasgow combined with an average rent of more than £1,000 a month on a typical four-bedroom student property mean that landlords there can expect the best rental yields in the UK at around 4.95%, according to property search website Zoopla, which used its own database for the findings.
The rental yield on a property is the annual return an investor can expect to make. It is worked out by calculating a year’s rental income as a percentage of how much the rental property cost in the first place. Zoopla’s findings were for made for gross yields, before the deduction of tax and expenses.Hull had the second best rental yield at 4.80%, followed by Manchester at 4.59%.
Many of the cities offering better potential returns for landlords are outside the more expensive areas of the South where property prices are relatively high. The size of the profit a landlord can expect to make also depends on the strength of demand from potential tenants.
Despite having the largest student population in the UK, London was only the 10th most attractive place to invest in student accommodation. 
Zoopla said this is because London house prices are rising faster than rents, which is reducing the potential returns for landlords. .
The average yield on a student property in London was found to be 4.20%, putting the English capital behind places including Cheltenham, Cambridge, Bristol and Luton.
Oxford did not make the top 10, despite its worldwide reputation. Ranked at number 14, with a typical potential rental yield of 4.02%, Oxford came behind Sunderland and Coventry.
Belfast was in 18th place with a potential yield of 3.96%, while Swansea was in 24th and Cardiff was at 30.
Carlisle, Middlesbrough and Bournemouth were found to offer the lowest potential returns to landlords. The typical potential rental yield in Carlisle was found to be 2.58%, putting it well below the UK average of 3.79%.In terms of the best value for students, Middlesbrough was found to have the cheapest digs. The average rent for a four-bedroom property in Middlesbrough was £562 a month.
At the other end of the scale, the average rent on a four-bedroom property in London costs more than six times that of Middlesbrough, at £3,485 a month.
Lawrence Hall, Zoopla.co.uk spokesman, said: "The largest number of students or the most prestigious university clearly isn’t necessarily best for investment returns.
"Landlords need to do their research and take into account the student demand, property supply, average property values and average monthly rents.
"There is no apparent North/South divide when it comes to student buy-to-let investments and a number of towns in the North are showing higher gross yields than the South as a result of property values having remained lower over the past few years whilst rental demand has increased."Best-performing student buy-to-let cities and towns for landlords, according to Zoopla, with the average monthly rent on a four-bedroom house, the average house price and the gross yield:1. Glasgow, £1,083, £262,888, 4.95%
2. Hull, £737, £184,440, 4.80%
3. Manchester, £1,053, £275,132, 4.59%
4. Cheltenham, £1,631, £429,585, 4.56%
5. Cambridge, £1,628, £429,976, 4.54%
6. Buckingham, £1,502, £405,017, 4.45%
7. Luton, £1,076, £291,454, 4.43%
8. Bristol, £1,224, £342,699, 4.29%
9. Lincoln, £877, £248,980, 4.23%
10. London, £3,485, £995,104, 4.20%

Rightmove - 8 key tips for buy to let investors

Research the market 

Before you start looking at properties, make sure you know what you're getting into. Look at all theoperty is a long term investment, so you need to consider whether you can afford to have money tied up for this long. If you might need quick access to your money, then this isn't the right investment for you. You also need to think about what happens if house prices fall further and whether you'll still be able to afford the property. Speak to other investors and see what their experiences are.

Choose the right area
When you're researching areas, it's essential that you think about who your potential tenants are and where they want to live. This isn't going to be your family home, so you need to forget about your own preferences. Look at the local transport links, schools and amenities and how these factor into the lives of your tenants.

Check the finances
Before you commit to an investment, you need to ensure that it's affordable. Look at the price of local properties and the possible rental income to see if the figures add up. A good guide for buy to let investors is for the rent to cover 125% of the mortgage, as this provides a buffer if the property is left empty at some stage. Mortgage deals for new property investors will require larger deposits (usually around 25% to get the best deals) and arrangement fees can cost more.

Research mortgage deals
Make sure you look at all the mortgage products available - don't just opt for the first one you find. There are organisations online that list details of the best buy to let deals. It's also worth considering using a specialist broker who can look across the whole market and might have access to exclusive products.

Your tenants
You always need to keep your potential tenants at the forefront of your mind to ensure that it's a property they want to live in. Decide on who you're aiming for. For example families will be looking for something very different from students or single people. Deciding on your target market will help you to focus on exactly what type of property you're looking for. The best types of tenants are those who want to stay for a considerable period of time and make the property their home. However, you also need to think about what will happen if you have unreliable tenants and how the tenants eviction process works.

Negotiate on price
As a buy to let investor you're in an excellent position to negotiate on the price of the property. With no onward chain there's less potential for the sale to fall through and you might be able to move faster. When you find the right property, make a low offer to start with and don't be tempted to pay too much.

Consider the negatives
When you're entering the property investment market, don't just think about the positives. Consider the negative aspects, including whether your investment will still work if prices fall – or demand drops. You need to think about what will happen if the property is empty for long periods, you need to start a tenants eviction process or the property needs essential repairs.

How involved will you be?
Will you want an agent to manage the property or will you deal with everything yourself? An agent will charge a management fee, but they'll take care of advertising, viewing and organising repairs. They will also be dealing with tenants for you - which can be a big plus. If you decide to go with an agent, research all the options and the different fees.

Buy-to-let lending at highest level since 2008

BUY-TO-LET mortgages are at their highest level since 2008 and up 19% on last year.

Lenders advanced 40,000 mortgages, worth £5.1 billion, to buy-to-let investors in the second quarter of 2013, according to data published today by the CML. 

Both the number of buy-to-let loans, and the value of lending, were the highest since the third quarter of 2008.

Buy-to-let lending is continuing to recover strongly, but from a low base.

The number of loans advanced in the second quarter was 19% higher by volume and 21% higher by value than in preceding three months (when lenders advanced 33,500 mortgages, worth £4.2 billion). Year-on-year, buy-to-let lending was 19% higher by volume and 31% higher by value (33,600 loans in the second quarter of 2012, worth £3.9 billion).  

Lending for house purchase accounted for around half the buy-to-let loans advanced, and increased by 15% by volume and 19% by value over the preceding quarter. 

But the growth in remortgaging was stronger, with an increase over the same period of 24% by volume and 29% by value. This growth in remortaging partly reflects improved conditions in funding markets and more widespread availability of mortgage credit.

By the end of June, buy-to-let mortgages accounted for 13.3% of outstanding lending in the UK (up from 13.1% in the preceding quarter and 12.9% a year earlier). The number of outstanding mortgages totalled 1.48 million, worth £168.5 billion.

Buy-to-let mortgages in arrears of over three months accounted for 8.4% of the total, up slightly from 8.3% in the preceding quarter but down from 9.7% a year earlier. The possession rate, at 0.09%, was higher than the 0.07% in the wider mortgage market, but fell from 0.11% in the previous quarter.

Commenting on the data, the CML's head of policy Jackie Bennett said:

"Strong rental demand is contributing to the continuing expansion of the buy-to-let sector, but growth is also being helped by improved conditions in funding markets and more widespread availability of mortgages. 

"These conditions are creating more opportunities for landlords to remortgage, as well as helping to fund increased activity in the mortgage market more generally. This spring, we have seen the highest levels of lending to first-time buyers since 2007, alongside the continuing recovery in the buy-to-let market."