Revealed – the best universities for a buy-to-let investment

15 January 2021 | Investment

The second-best bet for a profitable bricks and mortar investment in the student buy-to-let sector, the figures found, is Nottingham, with the University of Nottingham’s NG7 postcode home to an average rental yield of 7%. Meanwhile, Nottingham Trent’s NG1 postcode comes in slightly lower at 6.7%.

Elsewhere, the NE1 postcode, home to Newcastle University, also ranks within the top five, with an average yield of 6.3%, along with the University of Dundee (6%).

The top 10 best buy-to-let universities list is completed by the universities of Cardiff (5.9%), Leicester (5.9%), Strathclyde (5.8%), Kent (5.8%) and Warwick (5.7%).

“It’s no secret that the profitability of the buy-to-let sector has been hit hard by a string of legislative changes, particularly reductions on tax relief and an increase in stamp duty,” Phil Greaves, co-founder of UniHomes, commented. “With many also financially impacted due to the current pandemic, many landlords have also seen their level of rental income impacted.”

“However, the good news is that despite the current landscape, demand for higher education and student accommodation remains high, as many persist with their study plans with an eye on life after the pandemic.”

As a result, Greaves says, the student accommodation sector has continued to provide a consistent level of demand for many landlords, allowing them to avoid any lengthy void periods.

“In addition, many students finance their living arrangements via a student loan and so they don’t present the financial unpredictability that many are experiencing in the regular rental market at present. Of course, it’s still important to research other influential factors such as the yields available to ensure your investment is as profitable as it can be.”

The above, of course, must be caveated by the current situation, which means many students are back home living with their parents when they’d usually be living in student houses and flats in their second, third and fourth years.

There have also been question marks over whether landlords should refund or discount rent for students not currently living in their student homes, through no fault of their own, because of the circumstances of the pandemic.

Conversely, as this article from our sister publication Landlord Today makes clear, there are some students who have decided to stay in their student homes throughout winter rather than returning home to a house with noisy young siblings and the stresses and strains of family life, so the talk around refunds and discounts is more complicated than it seems at face value.

A number of larger student accommodation providers and operators, including Unite Students and Student Roost, have recently announced discounts for students who can’t reach their home because of the lockdowns across the UK.

Unite Students, the UK’s leading owner, manager and developer of student accommodation, announced that students will be able to apply for a discount of 50% off their rent for a total of four weeks and, in addition, will be given a four-week complimentary extension of their tenancy agreement at the end of the academic year to extend their stay into the summer – ‘a total of eight weeks benefit’.

Student Roost, meanwhile, has written to all of its residents to confirm that they can apply for a discount of up to six weeks’ rent if they’re unable to travel back because of the UK lockdowns.

A spokesperson for Student Roost said: “As one of the biggest student accommodation companies in the UK, we’ve seen first-hand how difficult the last 12 months have been for our residents.

“We recognise that many of our residents are currently away from their university cities. They are following the advice from the four UK governments not to travel back to their university campuses yet, unless it’s essential.”

“To help them follow this important guidance, we’re writing out to our residents to offer a discount of up to six weeks’ worth of rent.”

The spokesperson added: “All Student Roost residents who have been away from the property they live in prior to January 5 2021 and can’t travel back just yet to use their home with us can apply for this discount.”

“Equally, all of our properties remain open. Many of our residents have stayed in our properties throughout the festive period. In our properties, our residents are able to continue their studies, whether they’re currently being delivered online or in-person.”

It says all Student Roost homes are designed for students ‘to live with and make friends, build a community and have a safe and comfortable place to live and study’, and insists that throughout the pandemic it has ensured continuity of vital services like super-fast broadband and parcel deliveries.

What’s more, it says it has introduced a dedicated Resident Support Service, providing a tailored service to anyone needing to isolate due to coronavirus, or simply needing some individual support.

“We’d like to thank all our residents for taking the risk of Covid-19 so seriously and for following these vital rules. We know how worrying these times are for them, and our amazing team members are on hand to support them 24/7, whether they’re in their termtime Student Roost home or currently elsewhere,” the spokesperson concluded. 

Student visas set to drive increase in shared accommodation

According to a new report from The Mistoria Group, demand for shared accommodation from international students, particularly from China, the Middle East and Asia, is set to surge in 2021 as a result of new international student visas.

With the UK government hoping to attract 600,000 international students to its universities over the next ten years, the new visas, introduced this month, are set to lay the foundations for this huge growth.

Under the new visa requirements, international students will have to achieve at least 70 points to qualify. This is on the condition that they have secured a place in the programme, can support themselves financially and are fluent in the English language, with all these factors contributing to their points.

Students from outside the UK can apply for visas six months before their course begins – before, under the previous Tier 4 visa requirements, they only had three months to apply and secure a visa. It’s hoped that the longer lead time should ensure students can secure their student visas ahead of their course.  

What’s more, in summer 2021, there will be a new graduate visa to allow students who have completed a UK degree to stay in the country for two years, or three years if they have completed a PhD.

“While Brexit may impact the number of EU students studying in the UK in 2021, the government’s new visas will help boost international student demand from outside Europe, by providing a much better offering,” Mish Liyanage, managing director of The Mistoria Group, specialists in high-yielding student property investment, said.

“International graduates will be able to stay in the UK for up to two years after graduating in summer 2021, as long as they enter the UK by April 6 2021 and complete their final semester in the country.”

He added: “Towns and cities near the UK’s top universities are likely to see a surge in demand for shared student accommodation this year, particularly HMOs which offer an excellent return on investment. An HMO property with a superior spec can deliver investors an average gross rental yield of 18%, leveraged return on investment of 38%-plus, before any charges and voids.” 

He concluded: “A three bed HMO, which houses three students, can be bought from £120,000 upwards in the North West.  The return on investment is very attractive, too, with 13% combined yields (8% cash rental and 5% capital growth). The gross rent on the property will exceed £1,300 pcm, as each room is rented out.”

The Mistoria Group describes itself as a ‘high-yielding student buy-to-let investment specialist’, offering HMOs and armchair investments in the north of the UK, generating combined net cash yields (rental and capital growth) of up to 13%.

<!– LinkedIn –> This post has originally been featured in Property Investor Today.