A new report from CBRE has shown record levels of investment in the UK's student property sector.
In the first six months of 2015, some Pounds 3.98 billion was spent on student property - nearly double the amount invested in 2014.
CBRE expects demand for property in this asset class to continue to grow based on rising student numbers and a lack of housing stock. With more people than ever investing in the student property sector, Experience Invest has put together a guide to letting to students.
Tips for investors... Unlike traditional buy-to-lets, landlords can find it hard to reference using the standard process. Typically, landlords insist on a guarantor like a parent or guardian for each tenant. The guarantor is then responsible for the rent if the tenant fails to pay their rent.
Due to the structure of a student loan, many student tenants pay their rent in advance when they receive their initial payment from the loan company.
What's more, students typically take out 12-month contracts, which helps negate void periods. Just like regular buy-to-let property, students are also required to pay a deposit for the room/ property they are living in. If any damage is done to the room, a landlord is able to keep the deposit to cover it.
However, by law, the landlord is required to hold the deposit in the Deposit Protection Scheme (DPS) and queries may be raised by the tenant.
Renting to students... Once a market shunned by landlords, student property has emerged as a popular asset class over the past five years.
Traditionally university operated accommodation or HMOs (Houses of Multiple Occupation) were favoured by students but, as the market has evolved, privately run, purpose-build apartment blocks have become a popular choice for students. Privately operated accommodation tends to offer students more for their money. Wi-Fi, gym access, cinema rooms, outdoor space and communal rooms that provide entertainment such as pool tables, TVs and games consoles come as standard in many of these developments.
Many are inclusive of bills and offer 24/7 CCTV and security. These features are rarely available in HMOs or older student blocks.
As the market has evolved, the private market has attracted the eye of investors as the sector offers particularly high yields.
Investing in privately operated accommodation... Renting to students can be financially rewarding but it also can come with more work than more traditional buy-to-lets.
Of course, landlords could invest in student property through a trusted agent like Experience Invest and benefit from a fully managed asset.
Landlords can invest in one or more en-suite or self-contained studio rooms within a new-build development which is managed by a specialist management company.
Letting to students using this method allows landlords to receive a passive income from this top performing asset class.
The appointed management company will manage, maintain and market the room on the investor's behalf. All maintenance will be covered and, as the development is brand new, all relevant insurances will be covered.
For information about how to enter this sector, visit Experience Invest's website at: www.experienceinvest.com
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