Rents and yields set to rise for student landlords

Student landlords can expect to see rents and yields rise over the coming months as demand for beds outstrips supply.

Separate reports from property consultants CBRE and Knight Frank paint a positive picture in the student housing market.

The firms survey the market each quarter, giving statistics for the London and the regions. Both forecast growth.

Across the UK they predict an average 9.2% gross annual return in the next year, thanks to increasing demand.

Average rents are set to jump 2.75% in the regions from September 2013, while in London, they will rise 3%.

The capital has a shortfall in university and private hall accommodation, leaving some 95,000 students looking to the private rental market for their accommodation, says CBRE. Even with new student hall plans adding 18,600 beds by the 2015/16 academic year, this will still leave up to 80,000 students turning to private landlords.

Furthermore, future developments of student housing are likely to slow, meaning landlords could find their properties becoming even more sought-after. Tighter planning controls are also changing the location of traditional student areas, giving landlords in districts like Hammersmith, Fulham and Ealing a bigger market.

Student housing remains a successful sector in the real estate market and shows stability nationwide, says James Pullan, of Knight Frank Student Accommodation. He points out that all leading university cities have an undersupply of accommodation.

The positive outlook is thanks to many factors, including steady rental growth and the UK’s reputation for leading universities, Mr Pullan adds.

The CBRE report adds that landlords should select properties that are near to the local campus and have good transport links. Access to shops and other amenities are also key factors for tenants.

All this optimism comes despite slight falls in student application numbers, likely as a result of increasing tuition fees. The overall application picture does look more stable however, with slight increases expected in the coming academic years.

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