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Student lets to generate 12%+ yield

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28/09/2012
Buy-to-let landlords investing in student accommodation could enjoy total annual returns in excess of 12% in 2013, outperforming every other commercial property class.

According to the report, Halls, hotels and care homes: the changing face of UK property investment, published by property advice website BuyAssociation.co.uk, student letting has outperformed every other commercial property class over the past year and delivered consistent returns throughout the economic downturn.

The report quotes property agent Knight Frank, which forecasts like-for-like rental growth of 5% from student property next year, and anticipates that total returns will exceed 12%. This prolific growth is echoed by figures from buy-to-let specialist Assetz, which show that investors in this sector are benefiting from net yields of around 6.5%, almost twice the average yields in the wider buy-to-let market.

The consultancy says that limited supply of purpose-built student accommodation, coupled with rising global interest in the UK’s educational excellence, points towards further strong rental growth in the sector. Its Student Property Index highlights the customer base for purpose-built student accommodation in the UK including a very high proportion of overseas students, and it foresees this demand continuing to grow as global student mobility increases further still.

Overseas students have a high tendency to choose purpose-built accommodation in the UK, for a variety of reasons, including security, location and facilities.

Click here to read the full report.

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