Letting to Students can be Golden.
Students are always portrayed by the Entertainment Industry as a bit of a “feckless bunch”, who are either being slaughtered off by a mad serial killer or partying all nights, however to Landlords they can offer the “Golden Ticket"
According to Paragon Mortgages, as student lets are on a per room basis then they always outperform the wider market rather as against a per property basis let. Young couples usually earn Landlords an average income of 5.94 pc whereas the average earnt from a student let is 6.45pc.
Recently it was reported that rents had increased for the sixth consecutive month, up to an average price of £705 – £29 more than the same time last year and is likely to continue because of supply and demand.
David Newnes of LSL Property Services is predicting continuing high rents for students. "Demand from thousands of frustrated buyers each month underpins buoyant competition for rental homes, enabling landlords to increase prices," he said.
A spokesman for a leading buy to let mortage company said: "Yields are an important component of a landlord's overall business plan because they give a good indication of the income that the property generates. Of course, returns for many landlords will often be higher than stated yields as these are calculated at the current rental income against the property's value today, not taking into account capital appreciation since the landlord purchased the property or their loan-to-value."
Landlords thinking about student lets should do their sums properly when calculating potential income from tenants' rent and whether they can afford a gap in rental income. It now seems to be common practise within Student let agreements that over the Summer Period the existing or incoming tenants pay a reduced rent of 50% whilst they are not in the property because of holidays.
Yields also fluctuate dependant on the area in which the property is sited
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The West Midlands has the highest annual yield of 6.5pc and there are nine universities including Coventry and Birmingham within this catchment area.
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Yorkshire also has a high average just below the West Midlands with an annual yield of 6.4pc. The County boasts 14 universities including Leeds, York and Sheffield.
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Because of the high initial costs of purchasing property Central London housing produces the lowest average yield of just 5.5pc.