Posts with tag: student property investment

How to get the most from your student property investment

Published On: November 29, 2016 at 11:15 am

Author:

Categories: Landlord News

Tags: ,,,,

Landlord News spoke to Benjamin Hodds, the Managing Director of YourNest to share some of his top tips for investors, specifically in the student property market. This particular sector is known for high yields and high risks and here, Mr Hodds shares his experience of how to be successful in this market:

‘The property market is bouncing back, however we are seeing more and more barriers with taxes taking its toll on the buy to let market. With an increase in stamp duty, property prices back on the up and the ever-increasing costs of owning a buy to let property we must be creative to make our investments more profitable.

YourNest properties are on the forefront of these changes, working with landlords to manage their properties with many landlords requiring support to adapt their nest eggs in order to remain profitable in today’s market.

Improvements

Student properties are often at risk from long void periods and in today’s market students are becoming more demanding expecting more from their home and with the standard of properties improving the weaker properties are left until the very end of letting season, risking a lengthy void period.

In our opinion we are happy to see landlords improving their homes for students, there are far too many properties unsuitable for tenants and ultimately getting the most from your student property investment really boils down to how much you put into your property.

Investors often fail at the first hurdle and kit out their houses with low quality furnishings as we are as an industry in the mind-set that our properties will need a full over haul at the end of term. Our first piece of advice is to ditch the bargain shopping spree and invest in good quality furniture to limit having to replace this every year. It may seem an expense to start with, but throwing in a £300 faux leather sofa for the year is asking for trouble, invest in quality for those key pieces and save money down the line.

We’re fed up of seeing head to toe IKEA but if carefully selected teaming up some IKEA accessories with a luxury kitchen and finishing touches often does the job.

The cost of living is increasing, however if we take care and improve our ‘product’ we can offer our homes at an increased price resulting in an even higher yield.

How to get the most from your student property investment?

How to get the most from your student property investment?

Competition

There is tough competition out there with some fantastic properties on the market and you really must stay one step ahead. Students are looking for houses with TV’s, en-suites and trendy furnishings and if yours doesn’t fit the bill there are plenty that will. We really advise our landlords to invest the extra cash and limit the need for a re-haul every year. In our experience tenants respect their surroundings if they are given pleasant surroundings.

We visit a number of properties which just don’t make the cut and in today’s market we advise our landlords to implement specific changes or we kindly decline management. Keeping your tenants happy really is the key to getting the most out of an investment and if tenants are expected to live in anything below standard this is often the reason why our hard earned income is shrinking.

Once your house is up to scratch and we would advise making sure you or your managing agent is visiting every 6 months and inspecting the property, keeping you in the loop with any issues and pre-empting any large costs and protecting your income at the end of their tenancy.

Lastly, our ultimate tip would be to keep your student investment for some time and generate a healthy monthly income as well as that nest egg to release cash and build up your property portfolio.’

 

Student Property is Still a Good Investment

Published On: June 27, 2015 at 12:48 pm

Author:

Categories: Finance News

Tags: ,

Student buy-to-let property in the United Kingdom is still proving to be a fruitful financial investment. In comparison to capital growth, income generated from student properties can be substantial, if landlords are prepared to give their time and effort.

Yields

Kate Faulkner, Managing Director of Propertychecklists.co.uk, suggests that gross income “can be as much as 10-15%” for landlords who are prepared to put the work in.[1]

Student Property is Still a Good Investment

Student Property is Still a Good Investment

The downside, Faulkner suggests, is that landlords cannot retrieve their money quickly. This is due to the fact that student properties can take a number of months to sell and can need thorough and regular decoration. Faulkner warns potential investors: “Regular redecoration, new flooring and upgrading of kitchens and bathrooms,” can make student property sometimes feel like a “money pit.”[1]

Insurance

Most landlords will charge students for a full year tenancy, despite the majority of students only living in their property during term time. As such, there are a number of insurance issues that must be addressed to cover any periods where the property is to be empty. In addition, landlords must always ensure that student tenants are in a position to pay rent.

Faulkner states: “When choosing a property from a buy-to-let perspective, this is a relatively easy task as most will want to be within a mile of campus and, as they tend to be city centre locations, you can either buy readymade lets or a bargain fixer-upper to improve returns.”[1]

As with all buy-to-let properties, demand can vary over a long-term period of investment. Student landlords in particular can see demands hit by specialist student accommodation being built in a city. Others could be hit by rising tuition fees, which has already put a lot of prospective students off going into higher education.

Faulkner says: “Typically in the areas good for student lets, there are a few others who want to rent there.” She also warns that a landlord’s property “might be classed as a House in Multiple Occupation which may need a licence, adding to costs.”[1]

She concludes: “Student buy-to-lets can be profitable,” if landlords “understand the tax implications to income and assets of adding extra wealth through bricks and mortar.”

Furthermore, she says that landlords must “understand the rules and regulations of letting,” and ensure that themselves and their property are “approved by the student accommodation office.”[1]

[1] http://www.iii.co.uk/articles/147172/it-good-investment-buy-property-let-out-students

 

 

 

UK top 10 BTL property areas for student investment

Published On: October 4, 2013 at 10:32 am

Author:

Categories: Property News

Tags: ,

Glasgow is the top area in the United Kingdom for student buy-to-let property investment, according to new research data from leading property website Zoopla. Hull and Manchester came in second and third, with Bristol, Lincoln and surprisingly, London, the lowest-ranked in the top-ten.

How the data was recorded

Zoopla collated the data for the report by taking the average asking prices attributed to four-bedroom properties in student hotspots. These prices were then compared to the average student rent achieved, giving a total gross yield.

The report from Zoopla goes against other findings from Knight Frank, which suggested that London was the most profitable region for student buy-to-let investment. It is worth noting that the report from Knight Frank took capital growth into account, whereas Zoopla did not.

Student Boom

Yields from student inhabited buy-to-let properties are said to be lower than other categories on the market. However, the student market continues to be attractive due to the large numbers continuously entering higher education. In addition, periods where student houses are not let are rare and can be kept to a minimum.

Recent surges in student numbers have led to specialist accommodation being built to deal with the rise. Often, developers of the new property will allocate investors individual rooms or flats and ask for their money up front. Investors will then acquire a return once the rooms have been let and various costs have been deducted.

Uk top 10 BTL property areas for student investment

Uk top 10 BTL property areas for student investment

 

 

Properties of this kind have been developed particularly around London, with investors looking to cash in from wealthy overseas students.

Another reason for investors to enter the student buy-to-let market are that figures suggest they are least likely tenants to miss a rent payment. Around 38% of student landlords were faced with rent arrears during the last year, in comparison to 71% benefit of landlords letting to benefit recipients. [1]

Size doesn’t matter

Lawrence Hall, spokesman for Zoopla, said that the figures proved that size was not important when looking for value on an investment. On the report, Hall said, ‘The largest number of students or most prestigious university clearly isn’t necessarily best for investment returns. Landlords need to do their research and take into account the student demand, property supply, average property values and average monthly rents.’[1]

Hall said that the lack of country divide was also interesting, saying, ‘There is no apparent North/South divide when it comes to student buy-to-let investments and a number of towns in the North are showing higher gross yields than the South as a result of property values having remained lower over the past few years whilst rental demand has increased.’[1]

[1] http://www.landlordexpert.co.uk/2013/10/04/the-uks-top-10-areas-for-student-by-to-let-property-investment/

 

High Returns on Student Accommodation

Published On: August 30, 2012 at 3:51 pm

Author:

Categories: Finance News

Tags: ,,

Landlords can expect a higher return on student properties than most property investments today. This is due to thriving student rental income, according to a study by estate agent Knight Frank.

For example, a typical studio flat in Exeter is now worth £85,000, a strong increase from its £65,000 purchase price. This flat would receive £515 in monthly rent from a student.

Based on these prices, this flat would produce a £6,180 income annually before tax and letting agents’ fees. This is equivalent to more than 9% yield based on the original value of the property.

High Returns on Student Accommodation

High Returns on Student Accommodation

Landlords looking to move into this sector are advised to look for small houses that would be suitable for modernisation. These properties benefit from being near a university, or with good transport links.

Within a decent area, the house can be updated to suit student occupants. Reception rooms can be converted into bedrooms, for instance. It is important, however, to ensure that prospective landlords have checked whether they must register their property with the local council, if it is to house a large number of students. Details can be found at landlordzone.co.uk on this matter.

New-build flats or houses are more expensive to buy, and generally are smaller than older homes. Nonetheless, rents tend to be higher on newer properties.

Top 5 university locations for prospective investors

1 London There are more than 250,000 students within the capital city. In 2011, the average weekly rent paid for a student flat was £278. An en-suite room in a shared property was £210 a week for a student.
2 Brighton The University of Brighton holds about 21,000 students, alongside more than 12,000 at the University of Sussex.
3 Edinburgh Scottish and EU students are exempt from fees within Scotland, so demand is high. The University of Edinburgh has calculated that the average rent paid per week by students in either shared accommodation or individual flats, is between £70-£76.
4 Durham As a small town with over 11,500 undergraduate students, Durham is in high demand of low-cost accommodation for its students.
5 Manchester Rooms or apartments can vary from £50 up to £140 a week, according to accommodationforstudents.com.

John Heron, of Paragon Mortgages, who arrange mortgages in the student division, explains: “Student property is appealing to landlords as they usually benefit from higher than average rental yields, as rooms tend to be let on an individual basis. And there are generally lower arrears, as tenancy agreements benefit from parental guarantees.”[1]

Knight Frank estate agents have compiled a league table of target markets for landlords, based on student numbers and outstanding demand for accommodation.

Knight Frank predicts an average 5% rise on student rents across the UK in the next 12 months. This figure is significantly than estimations for the mainstream lettings market.

“The winners will be prestigious universities amid a flight to quality, as students search for the best course for their fees,” says James Pullan, of Knight Frank.

He warns, however, that there will be a greater need for high-quality accommodation, due to rises in university fees: “The new rules will engender the rise of the student-consumer. They will be paying a great deal to study, and are likely to become much more discerning over housing.”[1]

[1] http://www.landlordexpert.co.uk/blog/2012/08/28/uk-buy-to-let-landlords-experiencing-high-returns-on-student-accomodation