by Mark Johnston
Students Offer Best Returns For Landlords!
It appears that buy to let is an attractive income investment in a time of low rates and stock market volatility.
Lower house prices, rising rents and improving mortgage deals are tempting investors once more. Bricks and mortar is therefore a popular option for those who would rather grow their wealth through property than shares or cash.
According to a new survey from the National Landlords Association (NLA), the best type of rental property for people to invest in is student lettings, because these offer the most consistent income over a long period of time.
The fact is around 550,000 students will be packing their bags for university this autumn. Although the universities can just about accommodate all first year students in halls of residence, the majority of students, which is more than 70 per cent in most university towns, will be looking for accommodation in the private sector.
Simon Thompson, who is the managing director of Accommodationforstudents.com, says “student lets are high yielding, about four percent points higher than the rest of the private lettings market.”
Figures have revealed that in the last three months, only 30 per cent of student landlords had vacant properties, compared to 40 per cent of those who rent to families.
Other data also found that just 38 per cent of students had missed a payment in the past year compared to 59 per cent of professionals.
London is the most popular area for landlords, but generates a surprisingly low yield of 5.7 per cent because house prices are so high, according to mortgage lender Landlord Centre.
Therefore according to a new survey Property investors should look to university towns beyond London to find the best returns.
Robin King, director at Move with Us says “Outside London, big university towns and cities are seeing low property prices and rising yields, the perfect combination for landlords to achieve strong profits.”
Savills, the estate agents, says the five largest rental markets outside London are Manchester, Liverpool, Bristol, Birmingham and Leeds, all of which are popular university cities.
The best yields were reported in Leeds at 7.6 per cent, Liverpool at 7.4 per cent and Nottingham at 7 per cent, where house prices are lower but rents still healthy.
Overall the student buy to let market is buoyant and Knight Frank, a leading London estate agent and global property consultancy, has declared student property the best performing property investment in 2012, with rental income rising by 5 per cent per annum and returns averaging 11.5 per cent.
Letting to students may be higher risk, but the yields on so called ‘houses in multiple occupation’ can be temptingly high.
However, it is not as simple as it may sound, as choosing the right property in the right market is an essential to maximise returns. This means a strong understanding of the sector is vital.
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