According to research from Paragon Mortgages, landlords who let to students are seeing yields of 25 per cent more than in the general market. Where student property made up more than half of a landlord’s portfolio, the average yield rose to 8.6 per cent, with students making up 12 per cent of the buy-to-let (BTL) market.
Towns with modern universities have seen strong tenant demand, with Middlesbrough, Chester, Huddersfield, Leicester, Hatfield, Ipswich and Canterbury all experiencing strong growth in demand.
Commenting on the findings, Nigel Terrington, Paragon Group’s chief executive, said: “If landlords select the right type of property in the right location, the returns from the student market can be extremely healthy.
“While there will always be a social element to university, students are looking after the property better to avoid losing deposits and incurring costs for repairs and replacements. A significant element in this is that the quality of student sector property stock is in considerably better condition than it was in the past due to a combination of increased investment by landlords and regulation.
“Most student landlords will have let their property for the following academic year by early Spring due to the strong level of tenant demand and the competition between students for the better quality properties is fierce. This gives pricing power to the landlord.”
Paul White, consultant at Belgravia, said: “I had a customer recently who didn’t have a great credit record but was looking to get into buy-to-let, so new applications are still positive. People are still regarding it as a viable alternative to taking out a pension.”
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