Since the birth of the buy-to-let mortgage 18 years ago, student accommodation has outperformed all other traditional property assets and has been the strongest growing investment property market in the UK.
Student numbers continue to grow in many cities across the UK and student’s themselves are demanding a higher quality of accommodation than in previous years. This growing and stable market has allowed the development of a range of high yielding investment products based on “HMOs” or “Houses of Multiple Occupancy”. A HMO allows higher incomes because you are renting to a group of individuals who each pay for their rooms rather than a family.
Large glossy brochures often push “student pods” as an investment opportunity but these are a new and unproven investment, with some potential problems as we have discussed below. Our investment opportunities are detailed on this website and you can see some excellent examples on our investment pages.
Please continue reading to find out more about the potential returns student properties can offer…
Why Student Property Investment Is Right For You
Over the last few years, student properties in the North West have generated yields in excess of 13% and geared yield in excess of 35% in both Salford and Liverpool. Our research shows that the North West of England provides greater returns than any other region in the UK. This is fuelled by the massive regeneration taking place in Manchester, with the proposed High Speed 2 (HS2) high-speed railway between London Euston and the North West to be completed in the next 15-20 years.
A HMO (House in Multiple Occupation) property can provide an 8% minimum cash rental yield and a typical 13% total cash yield, including 5% capital appreciation. The average gross cash rental yields for the student property sector in the North West of England were 8.1% for the 2015.
The Pitfalls of Student Pods
If investors are considering student pod investments, they need to look at not only the opportunity, but also the risks too.
A major disadvantage of pods is their resale value and capital growth potential. The value of property will fluctuate with the market and the pool of potential investors is much smaller than for other types of student accommodation, such as HMOs and flats.
A normal buy-to- let allows you to sell the property at any time on the open market, using a reputable estate agent and you can expect a reasonable capital appreciation. However, if you are selling a student pod you will encounter problems. For example, who decides the market value? As a piece of real estate per sqm it is very expensive (double the average market value), there is no established resale market. Who will sell it? Is it an investment, or is it a piece of real estate?
There is also the issue of guaranteed returns of 7%. The guarantees are only as good as the person, or firm that is promising it. Investors need to weigh up whether that think providers of student pods are robust enough to stand behind the guarantee. They also need to be aware that the 7% guarantee may not stand in five years’ time, when their investment could have devalued as new developments have been released.
Why Should I Use Mistoria Group?
It’s simple – we are local experts and this is our field of expertise. We have many examples of successful investors who have been with Mistoria for many years and continue to use our services to build their investment portfolio.
We are financially stable and our Group companies cover every aspect of the business, from identifying the correct properties and locations through to managing the property and finding the tenants.
Our investments work and we can show you how. Successful property investment is not about future promises, it’s about a proven track record of success and the Mistoria Group is proud to demonstrate ours.
If you would like to know more, then simply contact us using the form below and one of our team will be in touch.
Still Have Questions?
Then lets talk. Complete this form and one of our team will ring you to discuss this opportunity.
We don’t hard sell – it’s no way to start what we want to be a long term relationship – we will simply talk you through our investment products to see if they are the right fit for you.
We look forward to hearing from you.
Stable investment opportunity
Proven track record of success
Well established company
Growing regional investment