Student properties offer some of the highest rental yields available,
new figures have shown, which could make this kind of real estate a target for investors. According to data published by Buy to Let lender Paragon Mortgages, the average yield generated by students is 6.45 per cent.
Young singles and retired people also presented good opportunities for landlords, the organisation found. Meanwhile, property owners in the West Midlands can expect the highest yields in the country - at 6.5 per cent - with Central London coming in at the bottom of the table. Lower yields in the capital were attributed to the high cost of buying in the city.
Paragon Group chief executive Neil Terrington commented: "Student yields typically outperform the wider market because they are let on a per-room basis, which can generate higher rental income." However, he acknowledged that higher maintenance costs are often associated with student properties
and this needs to be taken into account.
Investors may start targeting real estate, with an increasing number of people unable to obtain the finance to purchase their own home. The English Housing Survey Household Report for 2009-10 was published by the department for Communities and Local Government earlier this week. It revealed that 16 per cent of households in the country are currently private renters.
The survey also noted that in 2008-09 and 2009-10, 68 per cent of new households formed were renting their property privately. This demonstrates a rising demand for homes to rent due to a lack of supply of affordable housing.
And if the comments of one expert in the mortgage sector are to be believed, it is becoming easier for prospective landlords to access finance. Perran Cook, a mortgage consultant with Countrywide, recently stated that the amount of lending for Buy to Let properties is on the rise - particularly in city centres - although arrangement fees for such products can still be quite high.
- Thursday 07 July 2011