by House4Students 
Student property remains one of the most resilient corners of the UK rental market, and Spring 2025 is no exception. But as the landscape shifts, smart investors are asking: where is demand growing, and why?
🌍 A National Picture: Strength in Key Cities
Across the UK, student housing demand remains robust, driven by high university enrolment, limited purpose-built stock, and an undersupply of quality HMOs. According to UCAS, 2024 saw over 767,000 university applications — a 2% increase year-on-year, and postgraduate enrolments continue to trend upward.
Top Performing Cities for Demand:
- Manchester – Strong postgraduate base and multiple universities.
- Bristol – Tight planning restrictions and undersupply driving demand.
- Leeds – Affordable compared to London, but with Russell Group appeal. Strong rental yields relative to entry price.
- Birmingham – Huge student population, HS2 influence, and limited supply.
- Nottingham – Popular for both domestic and international students.
- London – World-class institutions and international appeal, but affordability remains a barrier to many students; demand remains high in outer boroughs with good transport links.
- Oxford & Cambridge – High prestige and stable demand, but tightly regulated markets with limited opportunity for private landlords outside of PBSA or managed lets.
- Durham – Smaller but highly sought-after, with strong demand for character properties in town; limited supply boosts competition.
Rising international student numbers (up nearly 10% since 2021) are also fuelling demand in cities with strong global reputations, such as Edinburgh, Glasgow, and London.
Where Do Returns Look Strongest?
When weighing capital values against achievable rent, some regional cities stand out for relative value:
- Leeds: A 5-bedroom HMO in Hyde Park can be purchased for around £325,000–£375,000. Gross annual rent typically reaches £28,000–£32,000, generating gross yields of 8–9%.
- Newcastle: In areas like Jesmond or Heaton, a similar HMO may cost £275,000–£325,000, with annual rental income in the £25,000–£30,000 range. Yields can exceed 9%, especially with strong management.
- Nottingham: 4–5 bed HMOs in Lenton or the Arboretum cost around £300,000–£350,000, with typical rents of £24,000–£30,000, delivering 7–9% gross yields.
By contrast, cities like London and Oxford may offer long-term capital growth, but yields are often compressed below 5% unless purchasing with low leverage or via cash.
🔍 Spotlight on Reading: What Makes It Attractive?
Reading may not dominate national headlines, but it’s quietly becoming a highly investible student market. Here’s why:
- University of Reading has a strong international reputation, especially in agriculture, meteorology, and business studies.
- A campus-style experience with green space, yet only 25 minutes from London.
- Consistently high student retention rates and a growing postgrad population.
Key Local Drivers:
- Limited PBSA pipeline compared to demand
- Licensing restrictions are reducing available HMO stock
- Students increasingly choose to rent with friends rather than stay in halls
- Earley and central Reading remain top locations
In Reading, a typical 4-bedroom student HMO might cost around £400,000–£450,000, with annual rents of £26,000–£30,000, equating to gross yields in the 6.5–7.5% range. Properties with 5+ bedrooms tend to deliver better economies of scale and are often snapped up early in the academic cycle.
We’re seeing more students seeking shared homes over institutional blocks to gain a sense of independence, affordability, and social connectivity. This makes well-run, compliant student houses in Reading particularly attractive to both students and investors.
📈 What This Means for Landlords and Investors
- Nationally: The market remains strong in core cities, but regulation and rising build costs mean new supply is constrained.
- In Reading: The opportunity is in quality over quantity. Properties that are well-maintained, energy-efficient, and sensibly located are snapped up early.
For landlords, it’s a good time to:
- Invest in refurbishing to stand out
- Explore 5+ bedroom houses to maximise yield
- Consider forming limited companies to manage tax
💡 Final Thought
The student market may shift in tone, but the fundamentals are still solid. And with Reading growing in stature and demand, now is a great time to reassess your portfolio or enter the market with the right strategy.
Stay tuned for our next update where we’ll explore how to navigate local licensing rules without losing rental income.
