Landlords with student property in their portfolios are benefiting from significantly higher rental yields than the buy-to-let market as a whole, according to Paragon.
Research by Paragon claims portfolios containing student property have 25% higher gross rental yields than for the rental market in general.
The survey of landlords found portfolios containing student property had a gross annual yield of 7% on average, compared with 5.6% for other portfolios. Furthermore, the research found when student property makes up more than half of a total portfolio, average yields increase to 8.6%.
Paragons says student landlords can also expect strong growth in the coming years as the Government continues to increase university numbers to 50% by 2010. Towns with modern expanding universities are experiencing the strongest tenant demand as local lettings markets attempt to keep pace, according to Paragon.
Commenting on the findings, Nigel Terrington, chief executive of Paragon, says: “Strong tenant demand in the student market is driving yields in that sector. If landlords select the right type of property in the right location, the returns from the student market can be extremely healthy.”
Terrington says student properties are often let earlier than regular properties, giving assurance to landlords, as well as often benefiting from parental guarantees. High demand for good quality properties can also give landlords significant pricing power.
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