Student accommodation can achieve high rental yields

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Commercial-Building

Increasingly, buy to let investors look to diversify their property portfolio to achieve higher rental yields.

Financial website, The Motley Fool, in September looked at the advantages of investing in student accommodation.

Buy to let landlords have faced extra costs due to increased stamp duty and reductions in mortgage interest payment tax relief. Landlords are also subject to stricter lending rules introduced by the Prudential Regulation Authority. To make their business more profitable landlords are looking to diversify by purchasing other property types.

The Motley Fool says that higher rental yields can be achieved with student property. Student numbers in the UK are expected to increase, so landlords should expect no shortage of tenants for student property. If the UK economy has a downturn, it is unlikely that this will significantly affect the student property sector.

Students living in houses of multiple occupation generally pay more rent than a single household living in the property.

There is a shortage of new purpose-built student accommodation. Many students want premium quality accommodation and are prepared to pay extra rent for more luxurious accommodation with extra facilities such as high-speed broadband, cleaning and leisure services.

Student accommodation requires more administration than standard buy to let property because landlords need to deal with multiple tenants. Agencies that manage student accommodation find tenants, collect rents and maintain the property.

Investors can invest in large companies that buy and run student accommodation but may prefer to purchase student accommodation using a commercial mortgage.

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