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Life Property


off setting the fi nancial blow. Flats and houses in university towns can produce a healthy yield (typically between 6-10%) while providing somewhere for their child to live while they’re studying – and a source of income when they graduate. “Student property has continued to be one of the most resilient investment sectors in the UK during the economic downturn,” explains Stuart Law from property investment specialist Assetz. “Most rental incomes and property values are either stable or increasing.”


F


Why invest in university accommodation? University accommodation has several potential capital drivers: rent increases, rising house prices, and yield compression and typical rents are signifi cantly higher than a comparable buy-to-let in the same city. Student property is a safe long-term investment, according to Charlie Vaughan-Lee who founded Student Cribs, www.student-cribs. com, a student letting, management and investment service. He has personal experience of being a student landlord; with help from his parents he bought a fi ve-bedroom house in Clifton, Bristol for £310,000 in 2002 when he was a studying at Bristol University. The property is now worth approximately £500,000 and commands a 6.5% annual yield. There are other benefi ts to investing in the student property market: the house or apartment is tenanted


aced with the rising costs of university, many families are turning to the property market as a means of


for almost all of the year and you typically know seven months in advance that your property has been let for the next academic year. If you’re a pure investor, rather than a live-in landlord, there need only be two outgoings: mortgage and management fee. Meanwhile parents who put a house into their child’s name, and act as a guarantor on the mortgage, may secure a better deal than a buy- to-let. A house in a child’s name can also allow them to benefi t from tax advantages, if the house is their primary residence. Any increase in the property’s value will be free of Capital Gains Tax, provided the child lives there alone or perhaps rents out one room to a friend, although if the property is in multiple occupation, the “owner


child’ will not get the full CGT relief. If you don’t want to give your child complete control of the house, setting up a trust may be a way round the problem.


Factors to consider University accommodation should be viewed as a long-term investment, according to Vaughan-Lee. “The two to three years that your child will live there during university is not usually long enough to generate a strong return,” he says. “And you should view it as an income-driven investment – if you make any capital that is a bonus.”


Where should I buy a student home? Towns and cities with more than one university and a high proportion of students living off campus provide the safest student property investments. It’s also crucial that a property is located within the student catchment zone of the particular town – areas such as Jericho and St Clements in Oxford, Jesmond in Newcastle and Pennsylvania in Exeter. Given that certain university towns command higher yields than others, pure


Renting a property


to students means a guaranteed tenancy for a year


78 FirstEleven Autumn 2011


www.fi rstelevenmagazine.co.uk


DIG IT


Stable property values and rental incomes makes investing in university accommodation great fi nancial sense, writes Anna Tyzack


PHOTOS: ISTOCKPHOTO; STUDENT CRIBS


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