Posts with tag: student property

The Dos and Don’ts of Student Property Investment

Published On: May 27, 2016 at 9:53 am

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With record numbers of students attending university, investing in student property can be a lucrative business. But what are the dos and don’ts?

Demand for rental property in many UK towns and cities has been driven by high numbers of students, causing a severe shortage of affordable student property in parts of the country.

Last year, the Government lifted the cap on the number of places that universities can offer by 30,000, causing a rush of students to UK institutions. According to UCAS, the amount of university applicants has reached a record high, with recent data showing a 3% annual increase in the number of applications.

The fastest growing sector is non-EU students, with levels up by 50% over the past ten years.

In the last 20 years, there has been extraordinary growth in student numbers, with the amount of international students expected to rise dramatically over the next decade.

The Dos and Don'ts of Student Property Investment

The Dos and Don’ts of Student Property Investment

House and flat share website SpareRoom.co.uk reports that up to 22 professionals and students competed for every available room in university towns and cities in 2015. Just 40% of rooms in the UK’s top 25 university cities are available to students, as some landlords are reluctant to let to this type of tenant.

The Managing Director of The Mistoria Group – one of the UK’s leading property investment companies – Mish Liyanage, says: “Unfortunately, university-managed accommodation has not kept pace with the growth in student numbers, and this is driving increased demand for HMOs [Houses in Multiple Occupation] and PSBAs in many UK towns and cities.

‘Traditionally, universities were responsible for providing good quality student accommodation. However, over the last ten years, demand for university accommodation has outstripped demand and the private sector has supplemented some of the shortfall.”

He continues: “The 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.

“Without doubt, the student rental market is the most financially lucrative for investors and landlords if it is managed well. An investor can currently buy a four-bed HMO in a good location for students and professionals, fully refurbished and furnished and tenanted for the coming year, for less than £165,000 in the North West.”

He insists: “Investing in student HMO accommodation offers a long-term investment option, as the property is highly likely to be in constant demand throughout the calendar year. Typical rents are significantly higher for student properties than a comparable buy-to-let property in the same city.”

If you have decided that student property is the investment option for you, here are some helpful dos and don’ts to ensure you make a lucrative investment:

Dos

  • Find an area with a reputable university that has a good reputation and high ranking.
  • The property should be 30 minutes’ walk or less from the university.
  • Find a reputable and credible letting agent to help you manage the property.
  • Go for student houses rather than pods. Houses have a good resale market and can be mortgaged.
  • Rent prices should be all inclusive of bills and broadband.

Don’ts 

  • Invest in a student pod.
  • Go for off-plan deals where you pay capital upfront and wait for years before you acquire the property.
  • Offer small, cramped rooms with no living space in the house.
  • Cut costs and go for a lower-spec property.
  • Look to flip – student properties are medium to high yielding and long-term investments.
  • Try and manage the property on your own if you have no HMO experience.

If you’re considering a student property investment, now is the best time to get into the market, ahead of the September rush.

Surge in international interest in student accommodation

Published On: May 23, 2016 at 9:24 am

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The latest research conducted by The Mistoria Group has shown that there has been a surge in student investment from international buyers.

In particular, there has been an influx of international investors purchasing student accommodation in the North West of England.

International Increases

Data from the investigation has found that sales of student property to international purchasers is up by a whopping 185% year-on-year.

The largest rise has come from investors in Hong Kong, where yearly numbers have trebled. India recorded rises of 220%, the Middle East 130% and Singapore 90%.

In addition, the research shows that international markets are opening in Canada and Australia, where demand is spiralling.

London has traditionally attracted overseas interest in student markets, with Kuwaiti, Qatari, Saudi and Iranian investors extremely prominent. The Mistoria Group suggests that student property is becoming more and more attractive to overseas investors due to the high yields and occupancy rates offered in the capital.

‘Exponential growth’

Mish Liyanage, Managing Director of The Mistoria Group, noted, ‘we have seen exponential growth in demand from international investors wanting to purchase student property. Although many investors are attracted by the high performing yields of houses of multiple occupation (HMOs), the UK’s outstanding educational system is a key part of the attraction. Many international investors want their children to have a school or university education in UK and they will buy a student property as a base for their children.’[1]

‘International investors have always considered the UK property market to be one of their favourite asset types. It offers investors safe and secure returns and we are expecting to see continued growth from international buyers,’ he continued.[1]

Surge in international interest in student accommodation

Surge in international interest in student accommodation

Estimates

Mr Liyanage went on to say, ‘The Bank of England has estimated that the number of UK homes sold to international buyers is about 3% across the whole market. We estimate that this is going to continue to rise over the next 5-10 years as the UK property market out performs many other markets for yields and capital growth.’[1]

‘Over the last 5 years, student properties in the North West have generated yields in excess of 13% and geared yield in excess of 35% in Salford and Liverpool.  An HMO property can provide an 8% minimum cash rental yield and a typical 13% total cash yield, including 5% capital appreciation.’[1]

Concluding, Liyanage claimed, ‘our research shows that the North West provides greater returns than any other region in the UK. This is fuelled by the massive regeneration taking place in Manchester, with the proposed High Speed 2 (HS2) high-speed railway between London Euston and the North West to be completed in the next 15-20 years.’[1]

[1] http://www.propertyreporter.co.uk/landlords/student-property-sees-surge-in-international-investors.html

 

Investment in student property set to increase

Published On: May 20, 2016 at 9:23 am

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More landlords are looking to invest in student property, according to new research.

Rising rental values in the sector are persuading more investors to purchase in the sector, according to data released by Knight Frank.

Increases

Investment in student property in Britain reached a record high of £5.1bn in 2015, a figure more than double the £2.41bn recorded one year previously.

The firm suggests that year-on-year growth during this year will follow the pace set in 2015, meaning there will be a rental uplift of 3.5%. This will give would-be investors a fairly secure income.

Knight Frank also predicts that the development pipeline for purpose-built student accommodation will slip during 2016, particularly in London.

Both London and Manchester are examples of cities with substantial student populations but modest delivery deadlines. That is the view of Neil Armstrong, partner at Knight Frank Student Housing Valuations.

Investment in student property set to increase

Investment in student property set to increase

Solid

Mr Armstrong said, ‘in 2015 Student Accommodation showed rock solid occupational demand supply credentials. Rental growth averaged at 3.65% as student numbers grew and supply struggled to meet demand. Whilst the macro picture (3.65%) is relatively steady, each market demonstrates different credentials largely depending upon the current level of structural under supply together with the development pipeline and its delivery in any specific year.’[1]

In retail, office and industrial, student accommodation offered large capital (15.3%) and total returns (21.5%) during 2015.

James Pullan, head of Knight Frank Student Housing, noted, ‘of the 49,271 student bedrooms transacted in 2015, over 46% were acquired by Institutions. This wave of Institutional investment has now polarised the market such, that assets which fail to meet institutional specification have much reduced liquidity.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/5/investment-in-student-housing-set-to-rise

Landlords, Be Aware of the Risks of Investing in Student Accommodation

Published On: May 4, 2016 at 9:23 am

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Student accommodation in the UK is a booming market, according to estate agent Savills. However, landlords are being warned to be aware of the risks involved in investing in this type of property.

Savills reports that £5.8 billion was invested into the student accommodation market last year, with private developments springing up in prime city centre locations.

These blocks of high-spec, boutique rooms, complete with en-suites and flat-screen TVs, promise the student a luxury experience.

Landlords, Be Aware of the Risks of Investing in Student Accommodation

Landlords, Be Aware of the Risks of Investing in Student Accommodation

Since 2006, the private sector has gone from providing 18% of rooms to a huge 41%. On top of this, the latest NUS-Unipol survey found that the average weekly rent for student accommodation in the UK now stands at £147 – up by 18% on 2012-13.

Student numbers are also expected to rise for the foreseeable future, thanks to George Osborne lifting the cap on how many students each university can take. A recent study by UCAS shows a 0.2% increase in applicants for 2016-17, in part due to a 6% rise in students from EU countries.

While demand and prices may remain high, a leading student property investment specialist, The Mistoria Group, is warning of the pitfalls associated with letting student rooms.

The firm’s Managing Director, Mish Liyanage, insists: “If investors are considering student rooms, otherwise known as student pods, they need to look at not only the opportunity, but also the risks too.

“Unfortunately, a major disadvantage of student pods is their resale value and capital growth potential. The value of property will fluctuate with the market and the pool of potential investors is much smaller than for other types of student accommodation, such as HMOs [Houses in Multiple Occupation] and flats.”

Liyanage continues: “With a normal buy-to-let, you can sell the property at any time on the open market through a reputable estate agent, and expect a reasonable capital appreciation. However, selling a student pod will encounter problems. For example, who decides the market value? As a piece of real estate per square metre, it is very expensive (double the average market value), there is no established resale market. Who will sell it? Is it an investment or is it a piece of real estate?

“There is also the issue of guaranteed returns of 7%. The guarantees are only as good as the person or firm that is promising it. Investors need to weigh up whether they think providers of student pods are robust enough to stand behind the guarantee. They also need to be aware that the 7% guarantee may not stand in five years’ time, when their investment could have devalued as new developments have been released.”

He adds: “However, despite the big pitfalls of student pods, student property is a very profitable asset class giving robust returns. For example, in the North West, a high quality HMO, which will house four students, can be purchased for £160,000. The return on investment is very attractive too, with 13% (8% cash rental and 5% capital growth). Unlike student pods, you can apply for a remortgage and there is a buoyant market for this type of student property. If you are building a portfolio, you can lend on your equity in the HMO to fund further investments.”

If you are considering an investment in the student accommodation sector, remember to fully evaluate the risks involved with this market.

Salford set for student property boom

Published On: April 19, 2016 at 11:36 am

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Having just been voted as one of the top-ten most improved universities, The University of Salford is expected to attract thousands more students through its doors.

As such, demand for student property is also set to rise, with savvy buy-to-let investors being urged to seriously consider purchasing property in the region.

Salford success

Just last summer, Salford was named as the second most improved university in the UK’s 2015 National Student Survey. This in turn saw the university soar in league position in The Times and Sunday Times Good University Guide 2016.

Despite the university planning to invest £81m in state-of-the-art student accommodation, demand for property will outstrip supply. This is according to the student property investment specialists, The Mistoria Group.

Mish Liyanage, Managing Director of The Mistoria Group, noted, ‘the UK remains the no 2 destination for international students after the US. The number of international students attending British universities has increased dramatically over the last ten years and this is contributing to a large rise in student numbers.’[1]

Salford set for student property boom

Salford set for student property boom

Surge

Continuing, Mr Liyanage said, ‘this surge in the UK student population provides investors and landlords with a great opportunity. Student property is a very profitable asset class giving robust returns. For example, in Salford a high-quality HMO which will house 4 students, can be purchased for £160k. The return on investment is very attractive too, with 13% (8% cash rental and 5% capital growth.)’[1]

‘Salford is a great place to invest. It is a dynamic and vibrant university city with world-class attractions like The Lowry, which has the largest free collection of L S Lowry’s work and the Imperial War North. Salford also offers a wide selection of theatres, galleries, designer shopping, river cruises, museums, plus The Quays, Greater Manchester’s unique waterfront destination. Over half the city comprises of green spaces and features forests, nature reserves, mosslands, parklands and picturesque villages. What’s more, there are hundreds of acres of beautiful parks, with a variety of wildlife habits,’ Liyanage concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/demand-for-student-property-set-to-boom-in-salford.html

Surge in student property investment to start 2016

Published On: March 15, 2016 at 11:52 am

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Student property is in high demand for buy-to-let investors ahead of the stamp duty changes in April, according to a new report from The Mistoria Group.

The student property specialists has revealed investors have been surging to complete deals by the end of the month, in order to avoid the 3% surcharge.

Top marks for investment

Research from the report shows that sales of student property in the North West has risen by over 30% already in 2016, in comparison to 2015. Over half of buy-to-let landlords investing in student property are from the South. Interestingly, one third are overseas investors, with the remaining 20% located in the Midlands and in the North.

In recent times, student housing has undergone a period of change. Higher rents has brought greater expectations from student occupiers, with many looking for luxuries such as TV’s, Wi-Fi and built in amenities as part of their rent.

What’s more, the abolition of a cap on student numbers has also led many universities to be mindful of an increase in enrolment numbers. Advice for landlords would be to seek out more high-quality, affordable student accommodation.

Rush

Mish Liyanage, Managing Director of The Mistoria Group noted, ‘we have seen a rush of investors wanting to purchase student property over the last quarter and we anticipate that demand for student property will continue to grow significantly in 2016 and beyond.’[1]

‘Since the birth of the buy-to-let mortgage 18 years ago, student accommodation has outperformed all other traditional property assets and has been the strongest growing investment property market in the UK,’ he continued.[1]

Surge in student property investment in 2016

Surge in student property investment in 2016

Yields

Liyanage also said that, ‘over the last 5 years, student properties in the North West have generated yields in excess of 13% and geared yield in excess of 35% in Salford and Liverpool. Our research shows that the North West provides greater returns than any other city in the UK. This is fuelled by the massive regeneration taking place in Manchester, with the proposed High Speed 2 high-speed railway between London Euston and the North West to be completed in the next 15-20 years.[1]

Concluding, Liyanage observes, ‘A HMO property can provide an 8% minimum cash rental yield and a typical 13% total cash yield, including 5% capital appreciation. The average gross cash rental yields for the student property sector in the North West of England were 8.1% for 2015.’[1]

[1] http://www.propertyreporter.co.uk/landlords/stamp-duty-hike-spurs-student-property-surge.html