Stoke-on-Trent offers landlords the strongest rental yields among the UK’s leading university locations, according to new analysis from Paragon Bank.

The city, which serves the University of Staffordshire and nearby Keele University, recorded a student property yield of 9.42%, based on average annual rental income of £14,222 and a property valuation of £150,982.

Based on Paragon’s mortgage applications in known student postcodes, Plymouth ranked second, generating a yield of 9.27%. Student properties in the city delivered average annual rental income of £35,224, against an average valuation of £379,881.

Liverpool, home to the University of Liverpool and Liverpool John Moores, completed the top three with a yield of 8.86%, generated from annual rental income of £26,399 and an average property valuation of £297,951.

Portsmouth and Cardiff rounded out the five highest-yielding locations, producing average returns of 8.31% and 8.27% respectively. Edinburgh followed closely at 8.23%, while Coventry, York and Leeds each generated yields above 8%.

Cities with Russell Group universities feature prominently in the top 15 rankings. Liverpool, Cardiff, Edinburgh, York, Leeds, Nottingham, Sheffield, Durham, Exeter and Southampton all appear among the 15 highest-yielding locations.

However, the two highest-yielding locations, Stoke-on-Trent and Plymouth, show that strong student property returns are not confined to cities with Russell Group institutions. The findings highlight the breadth of the student rental market, with competitive yields available across established regional cities and smaller university centres.

On average, properties in known student postcodes generate average yields of 7.32%, compared to 6.86% for non-student postcodes.

Commenting on the data, Paragon Bank managing director of mortgages Louisa Sedgwick said: “As students prepare for the start of a new academic year, these figures demonstrate the strength and breadth of the university rental market. Cities with Russell Group universities feature prominently, reflecting the large and established student populations found in many of these locations.

“However, the strongest yields are not confined to Russell Group markets. Stoke-on-Trent and Plymouth occupy the top two positions, showing how locations with comparatively accessible property values and strong student demand can offer attractive returns.”

She added: “Student property is a specialist market, so landlords need to understand local demand, the type and quality of accommodation students require and the responsibilities associated with managing shared homes. Those who approach the sector professionally can play an important role in providing good-quality homes while building a sustainable business.”