14:56 PM, 27th October 2010, About 11 years ago
Property investors looking for the best returns on their cash should look at the booming student letting sector.
Student numbers are increasing as universities and colleges in towns and cities all over the UK expand.
But while student populations are on the up, only one new bed space was created for every eight new students in 2009 – and the numbers are still outpacing accommodation.
Universities in Crewe and Carlisle have put out pleas for private landlords to take in students, while 200 single rooms have been doubled up with bunk beds at Falmouth to accommodate overflowing numbers.
The corporate halls providers – like Unite – are concentrating on providing student letting in London and the big cities, so the market has plenty of opportunity for the smaller, local landlord.
Add to that changes to houses in multiple occupation (HMO) planning rules from October 1 that do away with the need to apply for planning permission to convert a house in to an HMO in most cities, and the way is clear for landlords with funds to buy in to the sector.
The main reason to look at student accommodation rather than buy to let is cash flow.
Often a landlord can accommodate four students in a three-bedroom house. Each pays around £90 per week rent compared with an average £675 per month for a professional let for the same property.
Lloyds Banking Group and property portal web site Globrix both recently produced detailed student property analysis pinpointing the areas with highest student growth.
The Lloyds data shows half of the UK’s 72 student towns and cities had average house price increases that outstripped regional growth by up to 65%.
Three student hotspots were identified as Aberystwyth, Aberdeen and Winchester.
The Globrix analysis excludes London, Oxford and Cambridge.
Globrix suggests Glasgow is a good city for investment, showing a 10% net yield. There is no shortage of students seeking accommodation with three universities in the city, and Scottish degrees tend to take four years instead of the standard three in England, giving an extra potential year of uninterrupted income.
Other areas showing promise for investors, according to Globrix, are Sheffield, Nottingham, Southampton and Brighton.
Interestingly, several lenders, who at the onset of the credit crunched shied away from mortgaging HMO’s and student properties, have since re-entered the market. If you would like to speak to a specialist Consultant please call our Customer Care Team on 01603 894525. They will be pleased to take some basic details of your portfolio and refer you to the most appropriate Consultant to answer your questions and to help you create a plan of action.
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