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Student accommodation

Will student property investment grow as buy-to-let suffers?

Author: Staff

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Student property has been growing in popularity throughout 2015, with more and more investors putting their money into the sector as it moves towards the mainstream at an increasing pace. With some £5.7 billion already invested in 2015, it’s been a record year, but will 2016 be even more impressive for the student accommodation market in the light of recent announcements?

As popular as it has been, student property still falls behind buy-to-let property in terms of how many investors are spending in these sectors. With more than five million rental homes of the latter type across the nation, it has a positioning in the market that is always going to be hard to surpass.

However, this year has seen an announcement made that could damage the attraction of the buy-to-let market for investors, potentially making it more likely that people will put their money into student homes than sticking with more traditional strategies.

George Osborne said last month in his Autumn Statement and Spending Review that he will be adding a three per cent levy on top of stamp duty charges from April next year. This can add up to £15,000 to the price of purchasing a property for any landlord looking to get onto the rental ladder, or add to their portfolio, and it’s a prohibitive cost that could well drive investors towards more attractive and popular branches of the rental market.

In student properties, landlords are able to make investments that often fall below the threshold for stamp duty, which means the levy does not affect them at all, while also still allowing them to purchase assets that have the potential for giving them strong returns.

On top of this, the way student property investment works with companies like Experience Invest makes it a great way to invest in property in 2016.

Buyers will put their money into a property, but from there on in, it becomes more of a passive investment than something that will take up all of their time. The company deals with things like finding tenants, collecting rent, maintaining properties and dealing with repairs and complaints, while the owner can simply wait for returns to come in.

This highlights another real positive as well. Landlords who purchase student property in new builds are able to secure themselves a guaranteed return for a set number of years. For those who are putting their money into this area of the market for the first time – especially as they are moving away from buy-to-let – this can give them the peace of mind they need to take the big step into a new type of investment.

Thinking of investing in student property in 2016? Click here to access your free 2016 UK Student Accommodation Investment Guide.

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