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Student accommodation

Why Local Stakeholders Should Invest in PBSA

Author: Gemma

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We’re sure you’ve probably heard about the country’s uncertainty of leaving Europe. A smart move for investors is to explore alternative options that generate a better return on investment. 

A popular alternative for investors is Purpose Built Student Accommodation (PBSA). This type of property investment comes with multiple advantages that are detailed below:

1) Low Entry Cost

When you purchase a PBSA property there is a 0% Stamp Duty rate to pay. The government actually incentivise this type of property investment. 

An average price of a home in the UK at around £250k, the Stamp Duty cost for a buy-to-let investor would 4% of the purchase price. Click here to visit a Buy-to-Let Stamp Duty calculator…

2) Higher Returns

Usually a high performing residential property will get you around 3 – 4% yield after costs. This will vary depending on your location however, the return will vary depending on where the investment is located in the UK. 

Whereas student accommodation investment opportunities offer yields up to 8% NET and in some cases the return is assured over a pre-determined period of time.

3) Demand Is Higher Than Supply

The top reason why yields are high on PBSA properties in the UK is that demand is higher than supply in areas surrounding the university. Usually you will find a minimal amount of campus accommodation and even less student accommodation in the area.

Another bonus is that students will be attracted to PBSA as they are designed specifically for students.

4) No Impact from Mortgage Interest Relief Cuts

2019 is the first year of mortgage interest relief cuts. However this is not something that PBSA investors have to be worried about. This is down to the fact that properties in the PBSA market are normally cheaper and cash only. Therefore PBSA landlords are not impacted by these cuts.

5) Steady Income

Student rent prices don’t fluctuate that much (regardless of where they are in the country). Another perk is that payments are guaranteed by a guarantor that is usually the parent of the student staying in your property.  

6) Low Maintenance Costs

We’re not saying that having student residents is problem free, however they are known to be a lot less picky about things than your typical residential tenants. 

Most things will be dealt with by your property management company, but you’ll still be responsible for things like repairs. So if you know that your property maintenance costs are low, you won’t have to worry about repair costs should the worst happen. 

Article by Ben Fielding from Raised Floor Solutions who have been experts in their field for over a decade completing numerous high profile projects.

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