University property tempts buy-to-let investors

Friday, 24 June 2005 12:00 AM

Parents of children about to head off to university are being advised to look into buying a property for them to live in.

Property investment specialist Asstez points out that with more and more people carrying on to higher education, rents for student accommodation have risen by over ten per cent for each of the last three years.

Stuart Law, managing director of Assetz, commented: "University towns have enjoyed big rent increases over the past five years, and with Government incentives to boost student numbers to 50 per cent of all 18 to 30s by 2010, this growth rate looks set to continue. What's more, students now expect to pay rent for a full year, despite the fact that the academic year is only about nine months long."

Assetz gives the example of a five-bed apartment in Victoria Park, Manchester.

Not only is this close to the university campus, but apartments also come fully furnished with en suite shower rooms, broadband connections and colour TV.

Costing £248,000, the apartments return more than £17,000a year in rent, with the developer having already sourced tenants. Even after management charges of 15 per cent this represents a total rental income of £51,963 over a three-year university course, Assetz calculated.

Mr Law explained: "Students are becoming more demanding these days, with broadband internet access generally being viewed as essential.

"Investors should be sensible about the quality of fixtures and fittings - hard wearing and inexpensive are definitely best and we are definitely seeing evidence of better quality property being treated with more care, perhaps with parental guarantees being more commonly needed nowadays."

And after their degrees are over, parents of university-bound children are left with a choice.

"Purchasers may choose to sell the property for capital gain after their child has departed, or continue to let it. After the pension rules change on A-day in April next year, they will also be able to transfer the property into their pension and collect the rental earnings tax free for their retirement," Mr Law added.

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