One overlooked signing date could void a landlord's summer possession rights
Paragon Bank's data shows Stoke-on-Trent and Plymouth generating the UK's highest student property yields, at 9.42% and 9.27% respectively. But the more useful story for the trade sits underneath that ranking: the top-yielding city on the list is now moving to choke off the exact supply that produced its yield, and the possession mechanism landlords need to run a student HMO at all has just revealed a gap that could catch out anyone who lets to students the conventional way.
Stoke-on-Trent City Council, run by Reform UK, is pursuing one of the country's most severe HMO crackdowns, reacting to voter concern that shared housing is "tearing streets apart."
The proposals include a city-wide Article 4 Direction removing the automatic right to convert family homes into HMOs, alongside ward-level caps on HMO concentration set at 4% of residential properties in wards with a very high existing number, 2.5% in high-concentration wards, and 1.5% everywhere else.
The council is also consulting on a city-wide additional licensing scheme that would bring all smaller HMOs under regulation, on top of the planning restrictions above.
That matters directly to anyone reading Paragon's table and thinking Stoke looks cheap and under-exploited. Plymouth, the second-placed city, has required planning permission to convert a house into a small HMO in certain designated neighbourhoods since the change came into force on September 14, 2012 — the same kind of restriction on permitted development rights that Stoke-on-Trent is only now proposing city-wide.
In other words: part of what has kept Plymouth's yields elevated for well over a decade is a supply constraint that Stoke-on-Trent's landlords are only now about to encounter. A yield built on cheap purchase prices and unrestricted conversion rights looks very different once conversion rights disappear — new HMO stock gets harder to create, existing licensed stock becomes more valuable, and the arithmetic behind a 9%-plus yield starts to shift from "landlords found an underpriced market" to "landlords found a market about to close behind them."
The bigger problem: Ground 4A may not fit how these cities actually let
The regulatory story that should worry brokers more, though, isn't planning — it's possession. Ground 4A, the mandatory ground introduced by the Renters' Rights Act specifically to let student HMO landlords recover possession each summer, only works if six conditions are all met, and one of them is proving awkward in practice: no more than six months can pass between a tenancy being signed and the tenant's move-in date.
Student groups in most university towns sign in October or November for a September start — ten or eleven months later, which takes the tenancy outside Ground 4A entirely.
Two features that made the ground easier to use in its first months are no longer available: a shortened notice period that applied only until the end of July 2026, and a window allowing landlords with existing tenancies to serve a late statement, which closed at the end of May 2026. From here, as Tauhid Islam, a property law paralegal and founder of the Landlord Compliance Register, put it, the ground "works on its own terms or not at all."
That is a live problem in exactly the kind of market Paragon's release describes. Landlords who bought into Stoke-on-Trent or Plymouth on the strength of a 9% yield, and who let to students on the traditional fixed-term-anticipating cycle, may find they cannot rely on Ground 4A for next summer's turnover unless they move their signing dates forward — a change that runs against how the entire sector has operated for years.
For brokers, this is a concrete conversation to have with any landlord remortgaging or purchasing a student HMO: has the client checked their signing cycle against the six-month rule, and have they served the Ground 4A written statement before signing, not after?
Where Paragon's numbers fit in
None of this means the yield data is wrong — it's useful context, not the headline. Stoke-on-Trent's 9.42% yield is built on average annual rental income of £14,222 against an average valuation of £150,982; Plymouth's 9.27% comes from £35,224 of income against a £379,881 valuation.
Liverpool, Portsmouth and Cardiff follow at 8.86%, 8.31% and 8.27%, with Edinburgh, Coventry, York and Leeds all above 8%, and Nottingham, Loughborough, Sheffield, Durham, Exeter and Southampton between 7.67% and 7.97%.
Across known student postcodes generally, Paragon found an average yield of 7.32%, against 6.86% for non-student postcodes.
That is comfortably above the wider buy-to-let market. Pegasus Insight's Q2 2026 Landlord Trends research found an average UK buy-to-let yield of 6.4%, with the East of England and East Midlands leading regionally at 7.3% and Central London trailing at 5.3% — a reminder that student postcodes are outperforming the standard market, not just the weaker end of it.
Those are gross figures, though, and a separate Pegasus Insight report — its Q3 2025 Landlord Trends study, a different quarter from the yield figures above — is a useful corrective here too. It found landlords typically spend 25% to 45% of gross rental income on running costs, and HMOs — the structure behind most student lets — carry average annual expenditure of £35,720, against £19,604 for non-HMO portfolios. A 9% headline yield in a market facing new licensing costs and Article 4 compliance is not the same 9% it would have been a year ago.
The demand side is also more mixed than the release suggests
Paragon's release leans on "the strength and breadth of the university rental market," but the demand picture underneath that is not uniform.
On the domestic side, this year's A-level results day brought the highest number of 18-year-old UK acceptances on record, at 262,820, a 3% rise on 2025. International demand is moving the other way: sponsored study visa applications from students fell 33% year-on-year in the four months to April 2026, continuing a decline that had already seen international enrolments fall 6.1% in 2024/25.
For cities like Stoke-on-Trent and Plymouth, where demand is more domestically weighted than London or the largest Russell Group cities with big purpose-built student accommodation schemes, that divergence may actually work in their favour relative to markets more exposed to the international cohort — but it's a dynamic the release doesn't engage with at all, and one a broker advising a landlord on which university city to back would want to understand.
The interesting story here isn't "two unfashionable cities top a yield table." It's that the table's own leaders are moving through, or have already been through, the exact supply restriction that inflated their returns, at the same moment the mechanism landlords need to keep letting to students at all has a six-month trapdoor most of the sector's existing tenancy cycle falls straight through.
For mortgage professionals, that reframes Paragon's data from "where to tell a landlord to buy" to "what to check before recommending it": Article 4 and licensing status, whether the vendor's or client's signing dates survive Ground 4A, and whether the yield being quoted is gross or already net of the compliance costs that have risen alongside it.
