Archives May 2019

Total Returns for Student Accommodation up 12.3% Year-on-Year

Capital values for student properties increased on an annual basis, according to the latest Student Accommodation Index by CBRE.

In the year to September 2018, capital values for student assets rose by 6.5%, surpassing last year’s growth of 4.5% in the same period.

Gross and net rents increased on an annual basis by 3.0% and 3.4% respectively, whilst total returns at a national level rose by 12.3%.

Separating the figures by region reveals that capital values in Central London were up 12.4% in the year to September 2018, bringing total returns to 17.5% compared to 14.2% last year.

Annual total returns for regional student accommodation for 2018 reached 10.5%, with a 4.5% increase in capital values.

The regional figures were additionally divided into Super Prime, Prime, and Secondary locations, which had capital growth of 11.1%, 6.0% and -9.0% respectively, whilst net rental value growth was positive in Super Prime (3.6%) and Prime (3.9%), compared to a 1.5% decline in Secondary locations.

Capital values increased for larger student accommodations of 500+ beds by 7.2%, bringing total returns to 12.9%.

Medium-sized properties (250-500 beds) reported a 6.2% growth in capital values and a 12.2% increase in total annual returns, whilst smaller properties of fewer than 250 beds had capital growth of 5.8% and total returns of 11.6%.

Commenting on the figures, CBRE’s Head of Student Accommodation Jo Winchester said, “This first published Student Accommodation Index demonstrates the continued strong performance of the sector which has outperformed the CBRE Monthly Index over the last 8 years.

“UK Student Accommodation is now firmly established as a mainstream investment sector. Investors will find the increasingly sophisticated raft of influences on performance highlighted by this index, including location, asset scale, university rankings, applications, and distance to university very informative.”

High Stamp Duty Rates Push London’s Investors North

London-based landlords are increasingly purchasing properties in the North and Midlands to boost their buy-to-let returns.

According to Hamptons International, buy-to-let investors that live in London historically invest in properties in the capital.

However, the proportion of those living in the capital purchasing buy-to-lets in London has fallen by 17% since 2015, prior to the introduction of the Stamp Duty surcharge on additional property purchases.

Over the last 12 months, more than half (59%) of London-based landlords purchased outside the capital, 34% fewer than in 2010.

Stamp Duty bills for London properties costed landlords on average over the last year, compared to just beyond the capital; a 78% increase, with the data suggesting many of London’s investors are buying beyond the capital to avoid the higher rates.

According to the data, the Midlands and North are the most popular destination for London-based investors, with 34% purchasing a buy-to-let in these regions in the last 12 months, some 20% more than prior to the Stamp Duty surcharge.

Additionally, the Hamptons International data shows that rents in Great Britain increased by the year to March by an average of 1.9%, driven by a 3.7% surge across London, with every region except for Scotland recording positive rental growth.

Commenting on the figures, Aneisha Beveridge, Head of Research at Hamptons International, said:

“April marks the three-year anniversary of the stamp duty surcharge introduction for second homeowners. Following the tax hike, landlords have been adapting their strategy to find new ways to make their returns.

“Lower entry costs and higher yields outside of the capital are enticing investors to look further afield than they have previously.