The UK landlords had been an unhappy lot for quite some time, despite monthly rents rising by 2 percent in 2013. The average yield from a buy to let for a UK landlord is around 6.1 percent gross that is already down 0.1 percent compared to 2012.
But all these negative sentiments are being offset by the student accommodation sector that is trashing all these figures by giving sustainable yields of 7 to 9 per cent. Undoubtedly the London student renting sector is booming.
According to Peter McDermott, Director of UK-based Go Global Investments The Countrywide Residential Lettings are showing that despite 'Generation Rent' where a record number of people close to 10 million are renting out properties, the gross rental yields are not crossing the 6 percent mark.
Add to it void periods, tax, maintenance costs and unpaid rent the overall financial appeal of a buy-to-let landlord can be seen diminishing. That is why serious UK property investors are turning to student housing on a priority basis seeing an assured yield of 8.1 percent net for the next five years.
Mainstream asset class
With student renting in London quadrupling the perception about Student accommodation in property circles is that of an established mainstream asset class. With the number of affluent international students, increasing, the demand for student property is set to go up.
In fact the CBRE Student Accommodation Index shows 9.95 percent returns in 12 months from student letting, which is more than the analysts voucher for office, industrial or retail property for the same period.
McDermott is all praise for the student sector property as there are fewer headaches compared to average buy-to-let. The whole process is hands-off. When you have hired a professional company to get the tenants, maintain the building and manage it running all that the investor has to bother about is the rental returns coming to his bank account regularly.
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