Don’t forget the traditional, shared homes for undergraduates

WHILE purpose-built developments are springing up in most university cities, there is still a market for investing in long-standing houses that have been converted into shared homes for undergraduate students.

Property consultancy Allsop reports a rise in the number of investors choosing this type of property. Partner Andrew Wells says: ‘Student houses can produce annual yields of up to 12 to 13 per cent in lower ranking university towns, and an attractive 7 to 9 per cent in towns and cities with universities at the top end of the league table.

‘Set against a national average gross yield on residential property of less than 5 per cent, it is appealing.’

But even student house investors should understand tenants now expect more from their accommodation.

A recent survey by Currys PC World Business found that nearly half of students would be willing to pay more for fibre-optic internet, while more than a third would not rent a property without internet connection.

Both Loughborough and Bath building societies offer ‘Buy for Uni’ mortgages which provide students with the opportunity to buy a property with financial backing from their parents.

Mark Harris, chief executive of mortgage broker SPF Private Clients, says: ‘Financing is available for up to 100 per cent of the property purchase, as long as close relatives provide security.

‘With such mortgages, the idea is that the rental income from letting other rooms to tenants covers the loan repayments.’