Student properties provide good returns

Property investors entering the buy-to-let for students market need to do considerable research before deciding on the best locations.

According to experts in the sector is can be a profitable option with substantial returns but location is the key to success. Also looking beyond the UK is an increasingly popular option where prices are cheaper and returns still high.

'Students can be a profitable bunch to rent to providing you choose the correct location,' said Lee Grandin, managing director of Landlord Mortgages. 'Whether you are entering the market as an investor in student property, or as a parent buying accommodation for a child at university, the returns can be substantial,' he added.

He also pointed out that student numbers continue to rise so it is a market that is growing. Also the number of overseas students is increasing.

But renting to students is different from the average rental property. Reduced rents during the summer are common practice, properties must be provided furnished, including certain items of furniture suitable for students, and there is the possibility of the property being returned in a less than ideal condition.

Scotland, in particular Edinburgh and St Andrews, has always been a popular location to rent to students because many do a four year degree so the rental length is generally longer and students tend to be loyal to their landlords.

This is backed up by a recent report from Knight Frank that puts Edinburgh at the top of its Student Accommodation Review. The consultancy predicts that the student accommodation sector will outperform most other sub-sectors over the next three years yielding annual returns of 12%.

Other cities worth considering include London, Oxford, Cambridge and Reading. However, some areas like Leeds have an oversupply at present.

If looking abroad the student buy-to-let market in Hungary is a good option according to Sean Ashdown, Technical Director of Aquavista Property Consultants. 'There are particular parts of Budapest that are suited to student buy-to-let. People buy to rent as they would do in the UK and student areas are quite popular, such as area seven, five and six,' he said.

As well as rental income there is good capital appreciation in Hungary. 'Property investors who targeted Budapest last year enjoyed up to 15% growth on underlying property prices and these growth rates show no sign of slowing down currently,' said Rhiannon Williamson, Director of Amberlamb.

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