Landlords who rent out accommodation to students are making average returns of nearly 7% a year on their properties, a new study shows.

A three-bedroom property in a university town costs an average of £140,946, and investors are receiving around £60 a week in rent from each student, according to Landlord Mortgages.

The group said if three students share a property this equates to £9,291 a year, producing an annual yield of 6.59%.

Durham was found to offer the best returns to landlords, due to a combination of low property prices and high rents.

The average three-bedroom home in the city costs £114,588, but landlords can charge rents of around £67 a week, giving them an annual return of 9.12%.

Nottingham offers the second best returns at around 9% a year, followed by Stoke, Sheffield and Blackpool.

But at the other end of the scale Crewe offers the worst returns of just 3.4% a year, due to high average house prices of £170,910 and low average rents of £37 a week.

Other areas that offer yields of less than 4.5% are Pontypridd, Guildford, Cheltenham and Devon, all of which have higher than average house prices for a three-bedroom student property due to strong house price growth, but have static rents.

Lee Grandin, managing director of Landlord Mortgages, said: "Whether you are entering the market as an investor in student property, or as a parent buying accommodation for a child at university, the returns can be substantial.

"With the average student property offering 6.59%, the yields for renting to students are far higher than those to be gained by standard buy-to-let property.

"Average rental yields in England are currently 5.42%, so investors who choose to rent to students can make far higher returns, providing they find the right property."

But he warned potential landlords to do their research before they buy.

He said: "Local knowledge is of utmost importance, and landlords must also consider all of the differences that renting to students has to the average rental property.

"For example, that the properties must be provided furnished, including certain items of furniture suitable for students, and the possibility of the property being returned in a less than ideal condition."

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