[news] Report reveals facts and hotspots for UK student property

Purpose built Student Accommodation (PBSA)  in the UK remains an incredibly popular asset class for a whole host of reasons.

When it comes to looking for reliable growth and passive income through property, fully-managed student property is hard to beat. 

Here are 9 fascinating facts about student property!

Did you know that …

  1. It’s Big Business. In 2015, a massive £5.1b’s worth of PBSA transactions took place – the largest yearly figure ever.
  2. It’s Popular. Just over 49,000 PBSA beds were bought and sold last year.
  3. The Big Boys are playing. Nearly half of these were bought by institutions, including major pension funds such as Aviva and BlackRock.
  4. If a certain brewery built property, it would be this. PBSA has again outperformed all traditional property classes.
  5. Students are in love. PBSA is more popular with students than ever before, and this is set to continue
  6. It can be T.A.X Friendly. Most Purpose-built student property is exempted by HMRC from capital gains tax (but seek professional tax advice to confirm for your situation)
  7. More buyers love second-hand. With increasing yields (average rent in 2015 was up by 3.64% – well above inflation), the resale secondary market is becoming lucrative. Some buyers are prepared to pay a premium for PBSA blocks with years of trading history.
  8. It’s still growing. Growth is set to continue, with growth outside London expected to be greatest.
  9. There’s a “Brexit Bonus”. With a lower £ following the Brexit decision, the overseas student market could be set to enjoy another further boost in the medium term. PBSA is even more popular with non-UK students so demand could see another further shift from traditional privately let shared houses (HMO) and university-owned accommodation. 

If large institutions such as Aviva are buying PBSA for their managed funds, it may be worth considering taking a leaf out of their book? Especially when individual student suites can be owned for less than a deposit on some city centre apartments.

Discover more facts and figures in our latest PBSA report.

To get your complimentary copy, just click below… 

Property Investor Report : London Breakfast Briefing with the NLA – Part 2

Welcome to Part 2 of our coverage of The Property Breakfast Briefing at London’s Royal Academy of Arts, organised by the UK’s National Landlords Association.

The first part of this report generated a real buzz from readers earlier this week. Here’s the second and final installment of my report on this enlightening May morning in central London, focussing on the future of the UK residential market and the prospects for the private rental sector (PRS) in the new political world of taxed business expenses  for some sectors of UK property investment.

In the second of this two-parter from the Briefing are key comments from the panel and in particular Jim Pickard, the Political correspondent of the Financial Times, who gave his views on the recent Mayoral changes in London and its likely effects on the PRS.

Part 2 : Speaker – Jim Pickard, Financial Times’ Chief Political Correspondent

Here are the key topics covered by JIm during his presentation at the gathering, followed by some animated Q&A…

On the impact to housing of the new London Mayorship

The new London Mayor Sadiq Khan won the election with two key issues in his manifesto : transport and housing, so expect reform of both of these to feature highly (and quickly) during his term. At the end of the day London is a basically a labour city, so such a vote for a labour Mayor during a mid-conservative national term comes as no great surprise.

Issues with private lettings agencies are in focus and the mayor looking at setting up a public run letting agency. No details are available yet but we watch with great interest.

London has a population of 8.6m and this is widely expected to rise to 10m by 2030. The private sector is nowhere near meeting this with new build construction.

Another area of concern has been the proliferation of Iceberg basements (the construction of very large living spaces below existing high end properties, in prime central London – Moves are afoot to tighten up on planning permissions for these.

More significantly it is likely that foreign off-plan investments into London will be made more difficult, to level the playing field for UK based buyers.

Indeed a recent survey on behalf of KPMG indicates that 2/3 of foreign investors are concerned about potential policy changes following the Mayoral election.

Despite a widespread concern, the Mayor has no direct power to place a cap on rental income. 

The mayor is expected to encourage all London boroughs to introduce landlord licensing, based on the results of the “test case” in the Borough of Newham. But there are government restrictions on how widely this can be implemented. If a borough wishes to have more than than 20% of its rental stock to be under license, it would need to seek direct permission from the housing minister, who can refuse this.

On Brexit

Pickard believes there would likely be an Immediate depreciation of sterling in the event of a vote to leave the EU.

This would further increase the popularity in London and elsewhere for foreign property buyers.

Panel Q&A

Not surprisingly much of the discussion centred on the impact of the new world of tax legislation for private landlords.

One audience member, a landlord of 30 years, commented that despite the many challenges during that time, she has never felt so gloomy.

The panel commented on methods likely to be used by landlords to survive in the new climate. Landlords will need to carefully control their costs.

Notably, there was a prediction that landlords are likely to shop for better letting agent deals. In particular they will be more critical of tenancy renewal charges. They expect the market to become less complacent and more competitive, good news for those relying on agents.

Landlords are expected to be more likely to self manage their properties to improve cashflow. Whilst professionally-minded landlords will respond to the challenge appropriately this is seen by some to represent a danger to the quality of property management in the PRS in the near future.

One final sobering word came from Richard Lambert, CEO of the National Landlords Association: Given the track record, and the current political and popularist sentiment, It’s quite possible that rent controls could be introduced by the present conservative government.

For that, we will just have to wait and see…

Please post your comments or questions on any of the issues raised, or if you’d like more detail with a one-to-one chat with me over the next few days, contact me directly using link below. 

Property Investor Report : London Breakfast Briefing with the NLA – Part 1

Along with distinguished guests,  I was recently invited to a Property Breakfast Briefing at London’s Royal Academy of Arts, organised by the UK’s National Landlords Association. Here’s the first part of my report on what was a valuable insight on the present and future of the UK residential market and the prospects for the private rental sector (PRS) in the new political landscape for UK property investment.

Here in this two-parter are some rather insightful observations from Richard Lambert, CEO of the National Landlord’s Association and Jim Pickard, the Political correspondent of the Financial Times, who gave his views on the recent Mayoral changes in London and its effects on the PRS.

Part 1 : Speaker – Richard Lambert, CEO National Landlords Association

Here are some insightful observations from Richard Lambert, CEO of the National Landlord’s Association, made during his presentation at the gathering.

Based on a recent UK-wide NLA survey, Landlord confidence has collapsed as a result of the UK government’s tax assault on private landlords. As many of us know, since April this year a “second-home” stamp duty surcharge of 3% has been in place on all second homes and traditional buy-to-let residential property investment. 

From the survey it appears that George Osborne has had the equivalent effect on confidence in the PRS as the Property Crash during the Great Recession of 2008/9. Quite an accomplishment!

More feedback from the NLA PRS survey- Landlord Sentiment

The more properties owned by a landlord, the more likely the landlord is to expect a forthcoming crash in the residential property market. This is as expected though since landlords with larger portfolios statistically tend to be more highly geared.

A prevailing comment from landlords was on the lines of  “I was going to buy more property, but because of the taxation changes, now I won’t”. Some are reported to be selling off property immediately or planning to sell up completely.

The number of buyers are falling, and sellers increasing. In the first quarter of this year a cross-over was reached where the number of selling landlords exceeds the number of those buying.

Tenant Demand remains high

A piece of good news for landlords was there is no evidence of weakening in tenant demand across the UK. Therefore a common response to the forthcoming “landlord Tax” on mortgage interest for those landlords staying in the game, is to consider simply raising the rents to stay profitable.

A fascinating debate around this is : can landlords really define the rental market in this way? Aren’t business-centric landlords already achieving this? In other words, charging the most the market can stand already?

Specialisation and going “Ltd”

Other landlord responses to the impending changes are equally interesting: a trend is being seen towards specialisation and segmentation in the PRS. This presumably is borne out of the idea of adding value to a tenant’s experience with greater expertise in specialism that comes from a vertical and/or niche market. That is my take though – this wasn’t reported in detail.

The survey showed that 1/3 of landlords questioned are looking at incorporation.

In his summary, Lambert concluded from the survey that property still seen as the best investment option by most landlords, but a growing number are no longer convinced. 

Disclaimer : all stated remarks in this article are my personal interpretation during the event and should not be taken as direct quotations from panel or audience members.

(Watch out for second and final part of this article which will cover the presentation from Jim Pickard, Financial Times’ chief political correspondent as well as lively questions from the audience).

Please post your comments or questions on any of the issues raised, or if you’d like more detail with a one-to-one chat with me over the next few days, contact me directly using link below.