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
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.