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Home arrow News arrow Students make the perfect investment

Students make the perfect investment

Monday, 16 July 2012
If you are thinking about becoming a landlord then there is one sector you shouldn’t ignore - student accommodation. Ranked by The Times as the top asset class in the UK’s property market, the sector has rapidly outpaced the UK’s conventional buy-to-let market.

In fact students generated the highest yields for landlords in 2011 according to recent research carried out by buy-to-let mortgage specialist Paragon Mortgages. Using independent research from The Landlords Panel from BDRC Continental, the lender found that students generated an average yield of 6.45%; the average yield across the market currently stands at 6.2%.

Demand for student accommodation is set to increase further, especially with an influx of students from overseas. The number of international students opting to study in Britain has risen since 2006 to nearly 300,000 and this has led to a change in the face of the student property market. The stereotypical low-quality house shares are being overlooked in favour of high-quality studios and apartments.

This trend has been highlighted by the creation of a new premium student property brand, Vita , which launched its first project, Vita at The Chapel, in March. The fact it completely sold out in just a matter of weeks is no surprise as Vita projects offer investors a unique UK property investment in a very strong and growing market.

Following the sell-out success of their initial project, Vita is launching its second project, Vita at Tinlings . This project is similar to The Chapel in that it offers extremely high quality student property in a city centre location with assured returns for first 2 years and is 7 years fully managed. This means that the investment is totally hands-free and the management company will do anything from locating tenants, sorting out rents and contracts and taking care of any maintenance. However it also offers purchasers the option of a six year non-status payment plan. With only 50% of the list price required prior to June 2013, investors on the six year plan then pay the balance in fixed quarterly instalments. Alternatively, investors can opt for the standard plan and pay the remaining balance on completion.

Commenting, Mark Stott, CEO, Select Property, master sales and marketing agent to Vita , said: “Most people associate buy-to-let investment with the purchase of one to two-bedroom flats and trying to make single figure returns on the residential rental market. However savvy investors now associate UK property investment with the rapidly emerging student accommodation sector which is providing extremely healthy returns.

“The popularity of student accommodation amongst investors is ultimately driven by consistent occupancy rates of 99% or higher and a structural undersupply, particularly for higher quality accommodation. And this is set to increase, potentially offering even greater return.”

This notion was backed by Knight Frank’s 2012 student property report which read: “It [student accommodation] has outperformed every other commercial property class and delivered consistent returns throughout the economic downturn.”

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