Landlords turning to student market

Recent changes to the way landlords are taxed have caused questions to be asked in large sectors of the buy-to-let market.

But in spite of warnings that buy-to-let is struggling, investing in Britain's private rented sector continues to attract many people looking for a decent return on their money.

This is because it is still possible to make an investment in UK property profitable - you just need to know what you're doing and be much more selective than before.

One increasingly popular approach over the past few years has been to put your money into student accommodation, where investors can benefit from lower house prices in regional cities and towns and higher rents from multiple tenants.

In the last academic year there were 2.32 million students studying at UK higher education institutions, according to Universities UK.

The student lettings market has evolved rapidly in recent years, with a move towards purpose-built student accommodation alongside the traditional houses in multiple occupation.

These types of property are attractive to landlords, as they can be rented to multiple tenants, either as group or individually.

Multiple tenants can offer more robust income security - both for landlords and for their mortgage lenders. Even when one tenant falls behind on their rent, other tenants in the property continue to pay, reducing the likelihood of the landlord defaulting on their mortgage.

The same rationale applies to void periods, where a unit is not let and therefore providing no rental income. Dividing a property into multiple units limits the investor's exposure to income shortfalls.

Additionally, student accommodation is in demand across the country, providing a compelling argument for investing outside of traditionally high capital growth areas such as London and the South East.

Cities such as Leeds, Manchester, Birmingham, Nottingham and Liverpool have all seen property values rise over the past couple of years, anecdotally helped by landlords in the South selling up unprofitable buy-to-lets and moving their capital north.

If you are looking for a new or re-mortgage in the buy-to-let market please do make contact and one of our qualified advisers will be happy to help.