Renting to students could result in doubt-digit profits for landlords, Clear Property Investment claims.

One of Britain's biggest estate agents Knight Frank insists buy-to-let returns on student property last year showed a national average of 13.5 per cent.

The firm's James Pullan said: "Student property has delivered consistently healthy returns over the past five years. The sector avoided the crash in both capital values and rentals seen in the wider commercial and residential sectors in 2008 and early 2009.

"Across England and Wales, rents have continued to rise into the 2010/11 academic year, reflecting the strong demand for accommodation from a rising student population."

In line with the rest of the country, student rents are expected to increase and a shortage of accommodation is predicted for many cities and larger towns.

Buy-to-let investors for student accommodation outwith London last year made returns of 14.7 per cent in 2010, compared to 8.4 per cent in London. These figures are higher than income generated from other forms of tenant yields.

Returns can be even higher for families who act as guarantors for student sons or daughters. The flat is then let out to other students for room rentals while the son or daughter avoids paying tax on rental income by making use of allowances.

When selling the flat any profit would also be free of Capital Gains Tax. Mike Warburton, director of accountancy firm Grant Thornton explained: "Most people are aware that there is a CGT exemption for principal private residences; what is less well understood is the exemption for any let portion of a principal private residence."

Meanwhile, a student watchdog website earlier this year reported student rents had increased by more than 4.3 per cent on the previous year.

The portal, Accommodation For Students, surveyed 21,000 UK-wide properties. Founder Simon Thomson attributed the rise to higher buy-to-let mortgage costs for landlords which, he claimed, pushed up the cost of other student accommodation such as halls of residence.

Thomson's calculations put the average weekly student rent at £65.30. This was higher in London than other areas of the UK where in cities such as Manchester it was more than one third cheaper.

Students, meanwhile, are still exempt from paying local authority council tax.

For further information or advice on property investment contact any of our Clear Property Investment staff.

 

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