UK buy to let landlords experiencing high returns on student accomodation

Landlord Expert
By Landlord Expert August 28, 2012 12:06


A typical studio flat in Exeter is worth £85,000 — up from its £65,000 purchase price — and it would receive £515 monthly rent from a student.

That is £6,180 annually before tax and lettings' agency fees, or the equivalent of more than nine per cent yield based on the original value of the studio.


This is a far higher return than is available on most property investments today. Yet it is typical of booming student rental income, according to a study by estate agent Knight Frank.


Would-be landlords should look to buy a small house suitable for modernisation, near a college, or with good transport links.

Reception rooms can be converted into bedrooms to let. Landlords might also have to register their property with the local council if they house large numbers of students — see for details.


New-build flats or houses are more expensive and usually smaller than second-hand homes, but rents are often higher, too.

John Heron, of Paragon Mortgages, which arranges mortgages for the student sector, says: 'Student property is appealing to landlords as they usually benefit from higher-than-average rental yields, as rooms tend to be let on an individual basis.


And there are generally lower arrears as tenancy agreements benefit from parental guarantees.' Knight Frank has compiled a league table of markets based on student numbers and demand for accommodation compared with supply. 


It predicts an average five per cent rise on rents across the UK over the next 12 months — significantly higher than forecast rises for the mainstream lettings market.

'The winners will be prestigious universities amid a 'flight to quality', as students search for the best course for their fees,' says James Pullan, of Knight Frank.


But he warns that the quality of accommodation will have to rise. 'The new rules will engender the rise of the student-consumer. They will be paying a great deal to study and are likely to become much more discerning over housing,' he says.


Top-five university locations for would-be investors

1. LONDON: There are more than 250,000 students across the capital. In 2011, the average rent paid for a student flat was £278 a week, according to Knight Frank. A student with an en-suite room in a shared property paid an average £210 per week. 

2. BRIGHTON: The University of Brighton has around 21,000 students and there are 12,000-plus at the University of Sussex.

3. EDINBURGH: Demand is high as Scottish and EU students are exempt from fees in Scotland. Edinburgh University calculates that the typical rent paid per week by students — in shared accommodation, or individual flats — costs between £70 and £76.

4. DURHAM: With 11,500 undergraduate students at the university, this small town is pushed to meet demand for low-cost accommodation.

5. MANCHESTER: Room or apartment rents vary from £50 to £140 a week, according to


Landlord Expert
By Landlord Expert August 28, 2012 12:06


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