With Britain’s financial climate in 2019 heavily influenced by Brexit, yields from traditional residential property investment have been adversely affected. A popular, more financially rewarding alternative is purpose built student accommodation (PBSA), which has a number of advantages.
Higher percentage returns
Generally, a well-performing residential buy-to-let investment will offer around a three to four per cent yield after costs. PBSA schemes offer approximately a 10 per cent yield, which is typically guaranteed for up to five years by the developer.
Low entry cost
The government incentivises this kind of property investment and you avoid paying stamp duty when you purchase a PBSA property. This can make a significant saving.
Steady residual income
Student rents usually do not fluctuate too much and the payments are generally guaranteed by a student guarantor – often a parent – so you will get your rent. Investors profit from the fact that prices are largely uniform across the country.
High demand
Demand is generally greater than supply in university areas, so yields tend to be higher and student rents hold up well in comparison with traditional buy-to-let properties. PBSA is convenient for students, who pay one monthly fee that covers their wi-fi, council tax and rent.
There is advice available online on how to reduce PBSA risks as a landlord.
If you want to take advantage of property management CRM, look into solutions such as Property Deck property management CRM.
Hands-off for landlords
Developers who create PBSA opportunities will usually hand over the running and maintenance of the rental property to a management company; therefore, investors are spared the usual landlord headaches. This means a steady monthly income with no hassle or stress.
Mortgage interest relief cuts don’t apply
For the first time in 2019, mortgage interest relief cuts apply; however, the PBSA market is generally cash-only, so landlords are not hit by these changes.
Low maintenance costs
Students are generally less fussy than residential tenants. Spending less on maintenance can influence your bottom line.
In summary
If you want to invest in the property market, purpose built student accommodation is a wise choice. Demand for this sort of accommodation is only going to rise, as university admissions have seen steady growth. You may need to be cash rich; however, with everything in place, you can anticipate stress-free, above-average yields.
