Posts with tag: student property

How to get the most from your student property investment

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

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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 rents soar as expectations rise

Published On: August 25, 2016 at 8:31 am

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Latest research has revealed that student rents have surged at a substantial rate during the last 20 years.

Benham & Reeves Residential Lettings data suggests that student rents have soared by 55.5% over the period, in comparison to 24% for non-student accommodation.

Student rental rise

The firm suggests that students are moving away from more traditional accommodation in favour of more luxurious flats and halls of residence. This is despite the hike in tuition fees over recent years.

Gone are the days when students settle for substandard properties, with many demanding well-kept, decorated dwellings with fast internet and en-suite bathrooms.

As part of its investigation, Benham and Reeves took a survey of its own offices and respective student properties and tenants. Over the 20 year period, the average monthly spend on rent has increased significantly. However, the average number of people sharing a property has dropped.

Expectations

Lettings Director at Benham & Reeves Residential Lettings, Marc von Grundherr, said, ‘part of the reason we see student’s expectations and therefore requirements changing is because of demographics. With the abolition of student grants and the introduction of tuition fees, many young people from lower income backgrounds have eschewed university degrees and gone straight into the workforce. Those who have sought university degrees tend to be more affluent while simultaneously, universities have topped up student numbers by welcoming greater numbers of overseas students.’[1]

‘These groups simply aren’t prepared to live in traditional ‘student houses’ with 5 rooms to one toilet and a very basic kitchen. They want to continue to live at the same standard they have at home. Private halls of residence have increased in popularity in response, many with rents approaching £400 per week. Unsurprisingly, many students are also turning to studio and one bedroom apartments that command a similar rental value.’[1]

Student rents soar as expectations rise

Student rents soar as expectations rise

Clampdown

It is not just students becoming more refined that has led to an increase in expectation and rents. Increases in regulation enforced by councils, particularly a clampdown in houses in multiple occupation (HMO’s) means that larger properties normally shared by four or five people are becoming rarer.

A consequence of fewer people sharing a property is higher rents, alongside utilities and associated fees.

Another key factor is overseas property investment. Traditionally, overseas investors purchased property for their offspring while studying. Eventually, these properties were retained as rental investments.

Benham & Reeves Lettings found that 98.7% of their clients that did this found that when their children had left the UK at the conclusion of their studies, the increased property value covered the total cost of education.

Social change

Mr von Grundherr concluded by saying, ‘I think there is also greater social change, as well. Today’s students have grown up in an era of easy credit, cheap flights and mass luxury. The idea of slumming it is completely foreign to them. They would much rather go deeper into debt than shiver in an unheated house. Parents also have more concerns about their children’s safety and don’t want them living in a questionable part of town. The television series Fresh Meat may have only recently gone off the air but the premise of six students sharing a run-down Victorian house already seems dated

[1] http://www.propertyreporter.co.uk/landlords/student-rents-surge-as-luxury-digs-gain-popularity.html

Which University City Should You Invest In?

Published On: August 24, 2016 at 8:36 am

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Following on from A-level results day last week, many students across the country will be looking to move to a new university city for the first time.

Online estate agent eMoov.co.uk has since released its annual University Property Index, which highlights the best cities in the country to invest in, based on UCAS entry level and property prices.

The agent has ranked the top 100 UK universities by dividing the average house price in the area surrounding the main campus by the average UCAS point entry requirement, to determine the average property price per UCAS point required to study at each university.

Which University City Should You Invest In?

Which University City Should You Invest In?

The research has found which university city in the UK offers the best balance of affordable property for those considering an investment and a top quality higher education.

The average house price in the top 100 university cities stands at £319,963, with the University of Leeds coming out on top. With an average entry requirement of 436.5 UCAS points and an average property price of just £95,310, Leeds has a house price per UCAS point of just £218.

Contrastingly, the Imperial College London is in 100th place, due to the sky-high house prices surrounding its Kensington campus. Although the prestigious institution requires 566.9 UCAS points on average – the third highest in the top 100 – the average property price is a whopping £2.5m, resulting in an average price per UCAS point of £4,431.

The University of Sunderland ranked in second place in the table, with an average UCAS requirement of just 290.5 – the eighth lowest in the top 100 – and an average house price of £65,201. This equates to an average price per UCAS point of just £224.

Making up the top ten are the University of Bradford (£269), University of Leicester (£301), University of Hull (£305), University of Manchester (£308), University of Dundee (£313), University of Strathclyde (£315), Aston University (£320) and Newcastle University (£349).

The complete top 100 can be found here: https://www.emoov.co.uk/university-property-index-2016/

The founder and CEO of eMoov, Russell Quirk, says: “University is often the first life step for those leaving home to study, and the cost implicated in doing so are high, with many not paying off their student debt until years after graduating.

“Investing in a property for your child can be one way of reducing the cost and can act as an additional source of income for years to come. When looking for somewhere to stay at university, as with a job, properties close to the campus are always going to be a more attractive proposition, and so buying in and around the university can help ensure interest in a property from the get go.”

He adds: “This research highlights where across the nation offers the most attractive proposition for a uni-let, in terms of close proximity to the university, an affordable property price, as well as a good level of education where the university itself is concerned.”

Landlords, are you looking for a student property investment in one of these university cities? These tips will help you prepare your property for new students: https://www.justlandlords.co.uk/news/prepare-property-for-student-tenants/

Student Property will be Top of the Asset Class for Landlords, Says JLL

Published On: August 22, 2016 at 9:25 am

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As college students across the UK prepare to go to university, property firm JLL believes student property will be top of the asset class for landlords following Brexit.

Student Property will be Top of the Asset Class for Landlords, Says JLL

Student Property will be Top of the Asset Class for Landlords, Says JLL

JLL’s Student Housing team has projected rental growth of between 3-4% in London and 1-5% across the UK market for student property. Prime yields are also expected to remain robust, with good occupancy rates and attractive income growth for the 2016/17 academic year.

The Director of JLL’s Student Housing team, Huw Forrest, reports: “While it is too early to have definitive views on the impact of Brexit on the student housing sector, it is likely to remain more resilient than other sectors. This is due to the continued attraction of the UK university market, coupled with the depreciation of sterling, which will make the UK a more affordable destination to study for international students. It is also important to remember that EU students make up only 6% of students.

“We are currently seeing good levels of investment demand following the referendum and, generally, transactions we are working on have seen little impact as a result of the Brexit vote.”

JLL’s 5% rental growth prediction for student property is echoed by Jean Liggett, the CEO of Properties of the World, who believes that Manchester in particular will see such growth.

She comments: “The UK provides world-class education in a number of highly regarded institutes across the country. In fact, three of the top ten universities in the world are located in the UK. As a result, there will continue to be a growing demand for accommodation close to these universities, causing an increase in rents that will in turn provide higher returns for potential investors.

“What buyers like about this type of investment, post-Brexit, is the fact that they provide a fixed rate of return, have no extra costs during ownership and mitigate risk, subsequently giving them peace of mind. There will always be a high demand for good quality student accommodation. In our eyes, the sector will remain resilient.”

Manchester is already home to a booming student population, which is only expected to expand again this academic year. A spokesperson for the University of Salford states that it is expecting to see an increase in applicants for the start of the 2016/17 year.

Landlords, are you considering a student property investment? Remember that students can be some of the most reliable tenants, which is vital at this time of economic uncertainty.

Northern cities still produce best student property yields

Published On: August 18, 2016 at 9:04 am

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New research from property crowdfunding platform Property Partner has revealed that cities in the North of England still lead the way for student property rental yields.

Ahead of the new academic year, buy-to-let properties in Northern cities still come top of the class for potential returns.

Student success

Property Partner has constructed a list of 86 university towns and cities across Britain and Northern Ireland and ranked them in terms of rental yields expected in the local market.

Cities in the North East of England have seen A grades, with Sunderland topping the list with returns of 6.9%. Middlesbrough came next, with yields of 5.9%.

Birmingham took the third medal position, with Aston and Birmingham City University offering good demand for investors. Average house prices here stand at £116,732 per year, with expected yields 4.5%.

In Manchester, over 100,000 students are expected to descend on the city in September. All three Greater Manchester universities are the top-ten places for expected yields. What’s more, the city is experiencing substantial infrastructure projects and regeneration works in areas such as Salford and Deansgate, meaning an investment could prove very savvy in the long-term.

Capital Pains

However, it is a different story in London and the South East of England. Years of substantial house-price rises have moved to severely restrict buy-to-let yields.

Six of the bottom ten universities for rental yields are in London. Imperial College, located in Kensington and Chelsea, was found to be the lowest-yielding area surveyed, with yields of just 1.3%.

Dan Gandesha, CEO of Property Partner, noted, ‘in this era of ultra low rates and high market volatility, stable investments which provide a reliable income and medium to long-term capital growth prospects are the holy grail. Property is a total returns investment and until recently, it’s been a capital returns play.’[1]

Northern cities still produce best student property yields

Northern cities still produce best student property yields

‘But with Brexit, the rules of the game are changing. Now our investors are increasingly focussed on the reliable income they can earn, month after month. Property Partner enables anyone to invest in residential property all over the country, providing one-click access to grandparents, parents, and their college-age children, so they can take their view on the property market, wherever they study,’ Gandesha added.[1]

The top 20 university towns by average rental income by postcode were found to be:

University town Median Rent pcm Gross annual rent Average house price Average gross annual yield % Average net annual yield %
Sunderland £575 £6,900 £65,201 10.6 6.9
Teesside (Middlesbrough) £425 £5,100 £56,272 9.1 5.9
Aston + Birmingham City £676 £8,112 £116,732 6.9 4.5
Salford £750 £9,000 £131,863 6.8 4.4
Edinburgh £1,101 £13,212 £197,010 6.7 4.4
Manchester Metropolitan £895 £10,740 £160,315 6.7 4.4
Manchester £750 £9,000 £135,174 6.7 4.3
Newcastle + Northumbria £823 £9,876 £150,609 6.6 4.3
Nottingham + Nottingham Trent £794 £9,528 £151,535 6.3 4.1
Coventry £901 £10,812 £179,412 6.0 3.9
Bangor £750 £9,000 £156,173 5.8 3.7
Huddersfield £540 £6,480 £116,802 5.5 3.6
Portsmouth £925 £11,100 £201,434 5.5 3.6
Queen’s, Belfast £802 £9,624 £183,505 5.2 3.4
Edge Hill (Ormskirk) £1,040 £12,480 £239,298 5.2 3.4
Durham £650 £7,800 £151,438 5.2 3.3
Southampton £901 £10,812 £212,852 5.1 3.3
Cumbria (Carlisle) £477 £5,724 £113,025 5.1 3.3
Leeds £776 £9,312 £184,628 5.0 3.3

[1]

[1] http://www.propertyreporter.co.uk/landlords/northern-cities-continue-to-dominate-university-btl-scene.html

Over a Third of Landlords Plan to Invest in Student Property This Year

Published On: June 6, 2016 at 8:43 am

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Over a third of buy-to-let landlords plan to invest in student property this year, according to a new report by The Mistoria Group.

The research by the student property investment specialist shows that one in ten student landlords say their Houses in Multiple Occupation (HMOs) allow them to offset the new tax rules introduced by the Chancellor and remain profitable, while a further 50% do not believe any other asset class offers the same yields and return on investment as student property.

Over a Third of Landlords Plan to Invest in Student Property This Year

Over a Third of Landlords Plan to Invest in Student Property This Year

It seems that the new 3% Stamp Duty surcharge for buy-to-let landlords and second homebuyers has not dampened enthusiasm for the student property market.

While the rest of the buy-to-let sector may have slowed down, the same cannot be said for student property investment, according to the group. The report indicates that 35% of student landlords purchased HMO properties in the first quarter of 2016 to beat the higher tax rate, and a further 43% plan to acquire between two and three new student properties over the next 18 months.

If you are considering an investment in student property, here are some helpful dos and don’ts to think about: /student-property-investment-dos-donts/

The Managing Director of The Mistoria Group, Mish Liyanage, says: “Student accommodation can offer a number of attractive features to investors. The yields are high, as students settle for less space than other tenants, occupancy is typically very good, and it is neatly counter-cyclical, as more people go to university during economic downturns.

“Student property is a robust asset class. Since 2011, student accommodation has outperformed all other traditional property assets and has been the strongest growing investment property market in the UK. It has also continued to be one of the most resilient investment sectors, with rental incomes and property values remaining stable or increasing. The attraction of the student accommodation sector has been driven by structural undersupply and positive rental growth year-on-year.”

He advises: “This growth in student numbers is a great opportunity for landlords and investors to provide the right type of property that will attract lucrative students. Student accommodation has proven to provide better rental yields and there is an annual market for new students. What’s more, the rent is guaranteed by a parent or guardian and is paid promptly.

“A high quality HMO in the North West, which will house four students, can be purchased for just £160,000. The return on investment is very attractive too, with 3-8% cash rental and 5% capital growth.”

A separate study by LendInvest recently confirmed that landlords seeking the highest rental yields should look to buy properties in university towns in the North West.