Towns and cities with just one university delivered some of the best yields, with seven of the top 10 only having one main higher education institution.
Paragon found that student populations in these locations were also typically smaller, at less than 25,000, suggesting that the best returns are not always found in major cities.
Of the top 10 locations, only Liverpool, Coventry and Leeds had more than one university.
The next highest yielding location was Hull, home to 14,255 students, where the average student property in the city generated a return of 8.68% per annum.
Liverpool, the highest yielding major city with two or more universities, had an average property price of £225,178, with an expected rental return of £18,569 a year on average, an 8.25% yield.
According to The Mistoria Group, investor enquiries for student accommodation in Liverpool, Salford and Bolton has surged over the last six months, up 21% from UK and international investors.
Mish Liyanage, managing director of The Mistoria Group, said: “Without doubt, investors achieve considerably higher yields with property let to students, compared to those let to non-students in the same town or city.
“For example, student landlords in Liverpool made an average Gross rental yield of 13% in the third quarter of 2021, compared to 9% for those who did not let to students.
“Student property can either be similar to a normal buy-to-let, where the whole property is rented between friends who co-habit, or a student HMO where students rent each room individually on their own tenancy agreement.
“A property is deemed an HMO if at least three tenants live there, forming one household and sharing bathroom or kitchen facilities with one another.
“Investors can currently acquire a four bed HMO for students and professionals, fully refurbished and furnished and tenanted for the coming year, for less than £175,000 in Liverpool.
“Investing in student HMO accommodation offers a long-term investment option, as the property is highly likely to be in constant demand throughout the calendar year.”
