What do you need to consider when investing in student property?
Investing in student property in the private rented sector is potentially extremely profitable. Robust returns and excellent rental yields can be obtained as universities are lacking the relevant funds required to build or maintain their own housing. This has led to a severe shortage of student accommodation across many parts of the UK, helping rents in this sector to soar.
According to a report by Savills in 2017, investment in student accommodation was predicted to rise by 17% during the same as well as an increase in investment from 2016 to £5.3 billion by the end of 2017.
One major question circulating is how the will result from the EU referendum and the slow withdrawal of the UK from Europe affect the demand for university spaces and numbers of UCAS applications? Despite the general level of uncertainty surrounding the Brexit vote, figures of overseas students moving to UK universities to take advantage of the premium facilities, high quality education and the favourable exchange rate is progressing rapidly.
Providing you know what to look for regarding location, market value, the type of student accommodation available capital appreciation and rental guarantee, demand for student property increases when the proximity to a high-ranking university is within proximity. Although, there are a few factors you must consider before embarking on your next student property venture.
Considering a buy to let investment opportunity in a university town is a step in the right direction. However, it is essential to search for a location that produces the best returns.
A total of 564,190 people applied to attend university in the UK’s 2017 cycle, and of course most require convenient accommodation. Consequently, this raises the demand for properties in bustling university cities, combining this with a letting period of one academic year means that landlords have less stress trying to find new occupants, keeping void periods to a minimum.
Aiming to achieve high returns, you must consider your target tenants and the standard of accommodation they desire. For example, they may require wi-fi throughout the build, access to an onsite gym and modern furnishings. RW Invest, property specialists based in Liverpool, offer a diverse array of buy to let opportunities in numerous hotspots across the UK that cater for the increasing demands prevalent in the student market. They offer luxurious living while providing high rental yields and unparalleled potential for capital growth.
Investing in property has certain risks involved. It is imperative that you carry out the appropriate research and prepare for every eventuality when it comes to calculating what you can afford. The process of acquiring a buy to let investment is like buying your own private home. You will need to take the same budgetary requirements into account, including mortgage costs, deposits, legal fees and stamp duty land tax.
One major thing to consider is potentially affording multiple mortgage outgoings, from your own mortgage and the buy to let, often without any rental income which will help offset the costs. Void periods can become costly and are most of the time unavoidable. Often you will face scenarios where there are no tenants renting the property, therefore you must have financial strategies in place to cover the costs during these periods.