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Student property investment in the UK has become increasingly popular in recent years due to the many benefits it offers.
Investing in student accommodation is a great way to diversify your investment portfolio and earn passive income. In this article, we will discuss the benefits of student property investment in the UK.
High Demand
The UK is home to some of the best universities in the world, attracting students from all over the globe. With an increasing number of students, the demand for student accommodation is constantly on the rise.
This high demand has led to a shortage of purpose-built student accommodation (PBSA), resulting in a significant opportunity for student property investors. Investing in student accommodation is a smart move as there will always be demand for it, especially in university towns and cities.
High Returns
Investing in student property can generate high returns due to the high demand and low supply of accommodation. The rental yields for student properties are typically higher than traditional buy-to-let investments.
According to a report by Paragon Bank, in 2020, the average rental yield for PBSA was 6.6% compared to the 5.6% average for traditional buy-to-let investments. Additionally, PBSA investments also offer the potential for capital appreciation over time.
Stable Income
Investing in student accommodation can provide stable rental income, especially if you invest in purpose-built student accommodation. With PBSA, you can enter into long-term rental contracts with universities, providing a stable rental income stream for years to come.
This means you can rely on a steady cash flow, making student property investment a great choice for investors seeking passive income.
Low Vacancy Rates
The demand for student accommodation is high, and this means low vacancy rates. Once you have secured a tenant, it is highly likely they will stay for the duration of their studies, which can be up to three or four years.
This can result in minimal vacancies, reducing the risk of loss of income due to vacant periods and avoiding the hassle that can come with other forms of buy to let investment.
Higher Renting Period
Student properties are typically rented for a fixed term, which is usually an academic year. This means you can avoid void periods, which are common in traditional buy-to-let investments.
Additionally, the rental income from student properties is typically paid in advance, providing you with a more reliable cash flow.
Less Competition
Student property investment is less competitive than other property investments, such as residential or commercial. This is because it requires a specialist knowledge of the student housing market, which many investors do not have.
This means there is less competition in the market, providing you with a greater opportunity to secure profitable deals.
Tax Benefits
Investing in student accommodation can offer significant tax benefits, including mortgage interest relief and capital gains tax relief. Additionally, you may be able to claim expenses related to the maintenance and upkeep of the property as tax deductions, reducing your overall tax bill.
Diversification
Investing in student property is a great way to diversify your investment portfolio. By diversifying your portfolio, you reduce the risk of loss by spreading your investments across different sectors. S
Student property investment is a great choice for investors looking to diversify their portfolio and reduce their overall risk.
Is it right for me?
In conclusion, student property investment in the UK is a smart move for investors seeking stable and passive income streams. The high demand for student accommodation, coupled with low vacancy rates and high rental yields, make it a profitable investment opportunity.
Additionally, the tax benefits, lower competition, and diversification potential make it an attractive choice for many investors. However, it is important to do your research and seek advice from experts before investing in student accommodation.