A Guide To Commercial Property Investment

Although the media headlines often concentrate on the purchase of residential property for investment purposes, many canny investors are moving toward commercial properties to help diversify their portfolios. This makes a lot of sense, as having all of one’s eggs in one basket can lead to trouble.

Property values often move independently of other asset classes and are typically not associated with fluctuations in the stock market. This gives the investor a good opportunity to spread their risk and even out their investment strategy.

What does commercial property mean?

office building

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Commercial property generally covers all types of property that are purpose built with the intention of making an ongoing profit. Just some of these are:

  • Offices
  • Industrial units
  • Warehouses
  • Retail developments
  • Hotels
  • Eateries, such as restaurants and cafes

As you can see, the term covers a broad spectrum and it is this diversity that gives commercial property investment its appeal.

Why should I invest in commercial property?

Commercial property is attractive for a number of reasons, but it is the lease structure in the UK that often tips the balance for investors. Here we have a far longer length of lease for commercial properties than in either the US or Europe, and this can work in the investor’s favour.

London leases can be between 10 and 15 years while the rest of the UK still averages out at around 8 years. Compare this with a residential property lease of 6 months and it is easy to see why investors like the idea of putting their money into commercial property.

view of london

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Diversification is obviously another reason why so many investors choose to enter into the property market. Dealing in physical assets can bring about a relatively stable income return when compared to other investments such as the stock market.

Property is currently performing well and it has recovered fantastically after the dark days of 2008. When looked at alongside the current rates of interest available from savings accounts, commercial property becomes all the more attractive for those with a long-term view of their investment strategy.

Commercial property investment options

different investment paths

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The options that you have available to you as a commercial property investor differ somewhat from those who want to invest in the residential market. The three main ways to invest are:

  • Direct investment – If you are looking to have full control over the property that you invest in then direct investment is the way to go. However, for most private investors this simply isn’t an option due to the amount of cost involved. Direct investment means that you would be buying the whole property, either by yourself or in a group, so the outlay can be vast. It is for this reason that the majority of investors choose a different route into the commercial property market.
  • Direct commercial property funds – Often referred to as ‘bricks and mortar funds’ this option is a far more common way to get a foot in the commercial property door. These collective investment schemes invest on your behalf into a wide-ranging portfolio of commercial properties that would commonly be out of reach for most individual investors. Examples of which can include warehouses, supermarkets and office space.
  • Indirect property funds – Another form of collective investment scheme, indirect property funds invest in property companies by buying shares that are listed on the stock market. This can sometimes fly in the face of the diversification process as this type of investment is closely tied to the rise and fall of the stock market itself.

investment funds

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Funds such as unit trusts, investment trusts and OEICs give the smaller investor the opportunity to be part of multi-million pound building projects that they would otherwise be unable to invest in. These funds normally operate in one of two ways: direct property ownership or by owning shares in property related companies.

Profits are paid to investors either by way of rental income and capital growth in the case of property ownership, or by the payment of dividends and growth in market value for shares in selected property related companies.

Many funds cater for very small investment amounts, some of which only require a lump sum of just £500 or monthly payments of £50 for those who wish to invest on a regular basis. This is what makes bricks and mortar funds ideal for those who are thinking of entering the commercial property market for the first time.

What drives profits?

investment profits

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As mentioned above, dealing in commercial property generally gives the investors two potential revenue streams: capital returns (a change in asset value) and income returns (money generated by the asset). Capital returns are determined by how well the overall property market is performing, whereas income returns depend upon the lease structure that has been signed off between the tenant and the owner.

Supply and demand naturally comes into play when investing in the property market. Strong demand from businesses that wish to rent property that you have invested in will obviously push prices upward and increase the overall rental yield. Strong demand will also mean that the owner will not have to incentivise businesses with offers such as rent-free periods, further strengthening the returns for the investor.

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Good asset management will also help to push profits in the right direction. Rent reviews are typically made every five years where they are set to market level if that level has gone past what the tenant is already paying at the time of the review. Upward only reviews are common throughout the UK although there are other options available to the management team. These include:

  • Turnover related rents – This is where the rent is set as a percentage of the occupying tenant’s business turnover made from the space they are renting. This type of rent is more volatile than the upward-only model, but it is a popular way of setting rent for the retail sector.
  • Fixed uplift rents – As the name suggests, this type of rental agreement sees a fixed increase made to the rental amounts charged to the tenants after a certain period of time has elapsed, normally every three to five years.
  • Index-linked rents – A somewhat new way of managing rental increases in the UK is the index-linked model. These agreements are linked in to indexes such as RPI inflation and increases to rental charges are made in line with the movement of said index.

What are the risks?

danger tape

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Dealing in commercial property does come with a certain amount of risk, much like any other investment. However, narrowing down the different risks associated with this sector is difficult as there are so many ways for an investor to enter the market.

For instance, the risk associated with direct investment will be entirely different to the risk you will have if you choose to put your money into an indirect property fund. The individual investors appetite for risk is also a factor, as some funds will offer greater risk for higher returns and vice versa.

Due diligence is key here. If you decide to enter into the commercial property market it is vitally important that you research each individual fund or property yourself so that you are fully aware of the risk involved with that particular investment.

Final thoughts

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2014 saw gains of 19% in the commercial property sector so it is little wonder that this form of investing is receiving greater attention of late. The UK economy is doing well and this naturally leads to more businesses looking for property to rent. The increased demand for commercial space means higher rental yields are easier to command.

If you are looking for a way to spread the risk of your investment portfolio, commercial property certainly offers up a viable way of doing so. However, research into your investment vehicle of choice is vital and it is advisable that you use commercial property as part of a wider investment strategy.

Commercial property investment may not be suitable for inexperienced investors, but for those with a little knowledge of the investment market it can prove to be a valuable addition to a well-managed portfolio.

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If you enjoyed this blog post then perhaps you’d like to read “5 Mistakes Property Investors Make“?

A Guide To Buy-To-Let Investments

More and more people are looking towards the property market for a way to diversify their investment portfolios, and for many buy-to-let is the obvious choice. If you are someone who is thinking about investing in a buy-to-let property then you’re in the right place.

Our guide aims to explain all you need to know about creating your own property portfolio and give you the advice you need to get things right first time. So, without further ado, let’s get started:

What is buy-to-let?

Firstly, it’s important to understand exactly what buy-to-let means. Buy-to-let is a type of property investment where an individual purchases a residential property not to live in, but to rent out to others. By undertaking this investment, the purchaser becomes a landlord and they collect rent from their tenants for the duration of their contract.

Who are buy-to-let investments suitable for?

property investments

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Investing in property may seem like the easy way to untold riches but the truth is it’s not always that simple. Buy-to-let investments are not for everyone, and the main issue that you must address is whether or not you can afford to take the risks associated with dabbling in the property market. Despite the media hype surrounding buy-to-let investments, the risks are very real and you should only take on a BTL mortgage if you can manage those risks sufficiently.

You must also have a decent credit record in place before attempting to get a mortgage for a buy-to-let property and it is highly likely that the lender will only consider you if you already own your own home. This can either be held outright or with an existing mortgage, but it is very rare that mortgage providers will supply a buy-to-let mortgage to someone who doesn’t already have a property in their name.

Your age will also be taken into consideration and this can potentially be a stumbling block for those looking to take on a BTL mortgage for retirement. Many people leave the decision too late only to find that lenders are reluctant to take them on if they are over a certain age.

While there has been a recent discriminatory court hearing on this very subject, it will still be more difficult to get a BTL mortgage if that loan is set to end after you are 75. So, if you are looking to get a 25-year mortgage, the latest you should apply for one is 50-years of age.

Where do the profits come from?

profits from investment

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As with any investment, the main aim is to make money and the way that this happens with buy-to-let is twofold. In the short-term, money can be accrued from the rent received from the tenant. This is sometimes referred to as rental yield.

The rent you charge should always cover your mortgage payments and more, so that you can build up a reserve fund just in case any repairs or maintenance needs to be undertaken on the property.

The second way that profit can be made is when the property is sold. After holding the property for a period of time the hope is that the market will have moved upwards and the property can then be sold at a profit. This profit is commonly referred to as capital growth.

When considering a buy-to-let investment it is important to look toward the medium to long-term as opposed to hoping for any short-term gains.

Selecting a property

key in door

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The key to a successful property portfolio is in the selection of the properties that you place within it. Making the right choices at the start will stand you in good stead for the future. But how do you make the right choices? Following these key points will get you off on the right foot:

  • Research – Ask around your local estate agents about the types of property that are hot at the moment. Find out the areas that are mentioned frequently and look for a pattern. Enquire about what kind of rent these properties are fetching and who the tenants are; i.e. young professionals, students, retired etc.

Once you have this information you can then research the specific area further. Find out about the local amenities such as transport links and schools to see how they fit in with your prospective tenants.

  • Target – Make a list of the types of properties you wish to target. Bear in mind all that you have found out and work this into your equation. Location, tenant and property type should all fit together.
  • Calculate – Now you can start to work out the financial aspect of your investment. Look at the property types that you are targeting in the area you wish to make your purchase, and begin to calculate yields and whether or not you can obtain a mortgage for these properties.

Calculating rental yields

for rent sign

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Rental yields can be calculated to give you an idea of your returns over the course of a year. This is important to know, as a cheaper property may not always be the best investment.

Thankfully, the equation is simple and you only need to have two figures to hand – your projected monthly rental return and the amount of money spent on the property. Let’s take a look at a couple of examples:

Property A

Monthly rent = £1050

Investment made = £250,000

£1,050 * 12 = £12,600

£12,600 / £250,000 = 0.0504

0.0504 * 100 = 5.04% yield

Property B

Monthly rent = £900

Investment made = £225,000

£900 * 12 = £10,800

£10800 / £225,000 = 0.048

0.048 * 100 = 4.8% yield

As you can see, Property B cost £25,000 less than Property A, but Property A has a higher yield than Property B. This makes Property A the better investment of the two in the medium/long-term.

Financing your investment

investment finances

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Buy-to-let mortgages differ somewhat from normal residential mortgages. With a residential mortgage, the amount that you can borrow is normally calculated based on your income and outgoings. Buy-to-let mortgages, however, are worked out by taking into account the amount of rental income your property is likely to generate.

The base figure for most lenders is 125% of the mortgage payments that you will make each month. So, if your mortgage repayments are £950, your prospective rental income will need to be at least £1,187.50 for the mortgage provider to consider lending.

You will also need to be able to put down a fair size deposit on the property you wish to buy, typically around 25%. Some lenders may accept lower but this is a good guide figure to make your calculations around. It will also be expected that you have a personal income of £20,000pa or more on top of what you anticipate you will earn from the rent that you will receive.

What are the risks?

danger sign

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No investment is entirely without risk and buy-to-let is no different. Property markets can fluctuate and this can affect both the amount of rent that you can command and the overall value of the property should you wish to sell.

Structural problems too can take their toll on investors. If you are sailing close to wind in terms of what you are receiving in rent compared to what your mortgage repayments are you could find yourself having to delve into your own savings to repair a roof or deal with burst pipes.

Smaller problems such as broken appliances also cost money to repair and replace, and general wear and tear will eventually have to be taken care of too. As a landlord you have a duty of care to your tenants so you will need to fix any problems that may arise while they are renting your property.

Unsurprisingly, these issues never happen at a good time, and they can catch you unawares if you haven’t made the necessary provisions to deal with them.

Can you insure against the risk?

insurance button

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There are certain things that you can insure yourself for, but not all. Things like moves in the property market are not insurable but damage to your property can be safeguarded against. Similarly, you should have insurance for public liability too. This will cover you should a tenant or service provider be injured in your property.

Loss of rent can also be insured and there are other elements that can be protected as well depending on how much you wish to spend on insurance each month. Do your research and make an informed decision upon the level of cover you wish to take out.

As for contents insurance, tenants should be encouraged to take out their own contents insurance should they wish to cover their own personal belongings while they are renting your property.

How about tax?

When you take on a buy-to-let investment you are effectively running a business as a landlord. Therefore there are tax implications to take into account. These include:

  • Stamp duty land tax (SDLT) – Charged when you first buy the property
  • Income tax – Charged against the rental income
  • Inheritance tax – Charged if you should die whilst holding property
  • Capital gains tax – Charged when you sell the property
  • VAT – Charged whenever you make purchases or pay for services related to the property

Are there any additional fees to pay?

annual fee

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Other than your insurance costs and the expense of maintaining the property to a standard fit for someone to live in, there can be other costs associated with owning a buy-to-let property.

The main one would be if you choose to have a letting agent manage your property for you. Doing so can relieve a lot of the headaches that come with being a landlord, but that stress relief doesn’t come for free.

Ask around your local letting agents to see what sort of charges they make for managing the type of property you are looking to rent out.

Interviewing prospective tenants

If you are not using a letting agent you will need to interview and assess your prospective tenants yourself. In order to avoid future problems, you will need to find out as much as you can about them before you rent your property out.

The five main things you must obtain are:

  • Proof of identity
  • Proof of credit rating
  • Proof of current address
  • Employer’s reference
  • Reference from their previous landlord

Are there any other obligations?

electrical check

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As a landlord you will need to meet certain obligations in order to legally rent out your property. These are:

  • Mortgage consent to let – You must have permission from the mortgage lender to rent out your property. For the majority of buy-to-let investors this will not be a problem, as you will probably have a specific mortgage for the purpose. However, if you already own a property and are considering renting it out you must inform your mortgage provider and obtain consent to do so.
  • Hold an up-to-date gas safety certificate – If you have gas appliances fitted in your property it is part of your duty of care to have a current gas safety certificate.  These need to be carried out annually and by a Gas Safe registered engineer.
  • Have a current electrical safety check – Although it is not a legal requirement to have annual checks performed like the above gas safety check, you will need to comply with the Electrical Equipment (Safety) Regulations 1994 and the Plugs and Sockets etc. (Safety) Regulations 1994. This is an obligation of all landlords and the Health and Safety Executive enforce these regulations.
  • If you are supplying furnishings for your property they must comply with the Furniture and Furnishings (Fire) (Safety) Regulations 1988 which extends the scope of the Consumer Protection Act 1987 (CPA).
  • Energy performance certificate – Failing to produce a valid energy performance certificate can result in a £200 fine from your local TSO (Trading Standards Officer).
  • Fire safety measure need to be put in place too. Any building built after 1992 must have a mains operated interconnected smoke alarm fitted on the entry level to the property. Older properties should have battery operated smoke alarms fitted.
  • General safety is also an obligation that must be fulfilled by the landlord. Renting out a property that is hazardous could result in a £5000.00 fine, 6 month’s imprisonment, and it could invalidate your insurance policy.

Becoming a landlord involves a great deal of work and it is not an entirely hands-off investment. However, the rewards can be great, so if you feel you have what it takes to go through with purchasing a buy-to-let property why not begin your journey today – it could be the best investment you’ll ever make.

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If you enjoyed this blog post then perhaps you’d like to read “Ways to Increase Buy-To-Let Profits“?

Ways to Increase Buy-To-Let Profits

With the summer budget hindering buy-to-let property owners in the UK, landlords can be left looking for other ways to increase profit margins. Although first-time buyers will benefit from the announcement, existing home owners can only now claim tax relief on mortgage interest payments at 20%. This could be much lower than the previous marginal rate.

In this sense, squeezing as much money out of your incoming rent as possible has become more important for landlords. Here are a few ways to do so.

Tax Relief

tax relief

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Many landlords don’t realise they can offset various costs for tax purposes. The potential savings can be substantial, particularly through mortgage fees and interest. Although, as previously mentioned, the interest rate will be set at 20% from April 2017. Likewise, broker and arrangement fees can also be claimed back when the mortgage is taken out.

Further tax breaks can be made on letting agent fees, insurance premiums, general maintenance and utility bills, amongst others, which landlords should include on their self-assessment returns. If an accountant does this on your behalf then their fees are tax deductible also.

Landlord Insurance

insurance policy

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Although there is no legal necessity for to take out landlord insurance in the UK, it is highly advisable and usually required by mortgage lenders. Home buildings and contents insurance will not cover rented-out properties so be aware of this.

Shopping around for the cheapest insurance deal will help increase your buy-to-let profits. A recommended approach is by using price comparison websites or seeking out specialist insurance brokers. In addition, landlords with multiple properties can combine their entire portfolio under one policy to save money.

Tenants

student housing

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The price of insurance may depend on the occupants in your property. For example, long-standing professionals will be looked on more favourably than DSS tenants or a group of students. Their previous history can also be a factor as those with previous evictions or a criminal record can push premiums up.

You also need to have a strong degree of trust with new tenants as, if regular maintenance is required, your profits will be severely affected. In addition, landlords will be charged if any repairs are left unresolved or inadequate. Your insurance premium can also rise if household pets are present so consider this as well.

Area

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One simple way to increase profits is by researching rental hotspots where rates are high or expected to rise in the upcoming months. Most prospective landlords will only invest in property close by for convenience, neglecting larger profits that can be made further afield.

The recommended approach is to use various online outlets or estate agents to gather information. For example, a recent report by HSBC suggests that properties in cities such as Manchester, Blackpool and Kingston-Upon-Hull are producing healthy rental yields of nearly 8%.

Landlords across the UK should consider all options available to them in order to cut down costs and maximise profit margins. Look into all the possible tax breaks whilst choosing your tenants and location wisely to boost rent income.

If you liked this blog post then perhaps you’d like to read “Buy-To-Let Market Buoyed By Low Rates And More“?

Investing in Student Property in Liverpool

Along with its proud heritage and healthy local economy, Liverpool is a thriving university city with a large and increasing student intake every year. This makes it an attractive proposition for property investors looking to tap into the continuous demand for student accommodation. For prospective landlords, this guide will look at Liverpool’s potential for investment.

A Quick Look at Liverpool

Liverpool is one of the most distinguished cities in the UK, famous for its musical heritage, successful football teams and standout regional accent. Liverpudlians, or Scousers as they are popularly known, have a proud local identity, but are also welcoming to tourists and immigrants from all over the world.

During the 19th century Liverpool flourished throughout the Industrial Revolution as a major UK port city, creating a gateway for the British Empire and its vast trading network. This also brought in many migrants to the region looking for work on the docks, particularly from Ireland.

At the start of the 21st century, although Liverpool relies less on the port as an economic resource, the rest of the city had undergone a financial and physical resurgence. This has only been aided by the city’s flourishing tourism sector, boosted with the award of the European Capital of Culture in 2008.

Economy

david cameron economy

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This economic prosperity and increasing investment in various sectors of private enterprise has been an appealing focal point for student property investors over recent years, looking to cash in on the ever-present upsurge.

Employment figures are improving in line with the national average, with fewer people claiming job seekers allowance moving into 2015. The service sector accounts for the majority of employment in areas such as public administration, education, health and finance.

The city has a population of around 470,000, located within a wider Merseyside population of over 2 million. In addition, a steady stream of tourists make Liverpool the fifth most visited city in the UK, bringing in over £1 billion to the local economy every year.

Regeneration

liverpool regeneration

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With the city in seemingly good shape and expected to keep growing, Liverpool has been the subject of multi-million pound regeneration projects throughout the 21st century. The impressive Superport is home to some of the world’s leading manufacturing companies, aiding many major UK, Irish and global shipment links. A new £1 billion deep-water terminal is due to become operational in late 2015 as well.

Another recent regeneration project has taken place on Liverpool’s Waterfront area with a £40 million exhibition centre and £26 million hotel expected to be completed by 2016. In addition to a £1.5 billion scheme to regenerate the Kings Dock and Lime Street areas, Liverpool is fast becoming one of the UK’s most desirable cities to invest in.

Transport

liverpool transport

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Liverpool has fantastic transport links providing easy access around the Merseyside region and all across the country. The M62 passes through Manchester and Leeds on its way to the east coast, whilst also providing a route onto the M6 (for Birmingham) and M1 (London).

The city is well served by bus, with the Queens Square and Liverpool One terminals providing numerous services around Merseyside. In terms of railways, there are numerous stations throughout the city such as Lime Street, South Parkway, and Liverpool Central.

Located to the south of the metropolitan centre is Liverpool John Lennon Airport, around 7 miles away. Low-budget airlines such as Ryanair and Easyjet primarily operate from here with connecting flights offered across the UK and Europe.

Attractions

echo arena liverpool

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You can’t talk about Liverpool without mentioning its illustrious musical heritage, most notably as the birthplace of The Beatles. Nods to the Fab Four are dotted all around the city, none more so than the world famous Cavern Club, a regular haunt of the band in the 60’s, situated on Mathew Street.

The Cavern lines up alongside an eclectic list of many other live music venues, notably the Attic, Sound and Kazimier. The 12,000 capacity Liverpool Echo Arena plays host when big acts are in town, also accommodating large sporting events and conferences. For a more refined music approach, the Philharmonic Hall is the chosen venue for classical concerts.

Liverpool and Everton fc are recognised all around the world, playing their home games at the famous Anfield and Goodison Park stadiums respectively. Other sports tend to play second fiddle to football, although there are plenty of sporting facilities to partake in such as the Awesome Walls climbing centre. Aintree race course is another notable attraction, home of the renowned Grand National horse race every April.

Culturally, Liverpool hosts an impressive array of theatres, museums and galleries. The Museum of Liverpool is well visited, whilst the Liverpool Empire and Unity Theatre stage a whole host of entertainment shows each year.

In terms of retail, Liverpool is well served by various shopping centres, notably St John’s and Liverpool One, and plenty of high street stores also.

Why choose to invest in Liverpool?

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Photo Credit: *Psyche Delia* via Flickr

Despite its prominent national standing, Liverpool has less expensive house prices compared with the UK average. Terraced properties, accountable for the majority of sales in the city, were priced at just over £100,000 whilst flats were sold at an average of £109,000. These are the main types of property that make up private student accommodation, helped with an ongoing demand year on year.

Although one bedroom rental prices in Liverpool are £500 per calendar month on average, students will be looking at rooms lower than this at around £300 pcm. However, with many of these properties containing 4+ potential bedrooms, the numbers soon become attractive for prospective buyers.

Another thing to consider is the large quantity of international students who relocate to Liverpool, a figure estimated around 6,000 and predicted to rise in the coming years. These students are generally known to prefer higher end housing, a bonus for investors with a larger budget to spare.

Four main universities are located in Liverpool, home to over 50,000 students collectively. They each have their own identity and specialise in different areas of learning. Here is a closer look at each one.

The University Of Liverpool

university of liverpool

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The University of Liverpool is the city’s most prominent higher education institution, founded in 1881 and boasting 9 Nobel Prize winners within its alumni. It offers over 250 Bachelors courses across 54 departments, homing around 19,000 students of mixed nationality.

The main campus is located in the city centre containing an assortment of lecture halls, teaching areas, research facilities and accommodation. The Liverpool Guild of Students – the university’s student union – comprises bars, restaurants, training facilities, and also hosts live events on a regular basis.

John Moores University

John Moores University comprises the largest student population in Liverpool, with a healthy number of new applicants each year. This is due to the reasonable UCAS points requirement alongside substantial 122 undergraduate courses on offer. In addition, the university has links with over 400 companies providing a viable route into employment for many graduates.

The City Campus is near to the prominent Walker Art Gallery, Liverpool Museum and Central Library, making it a perfect location for undergraduates to partake in extra-curricular studies. Nearby is the Mount Pleasant Campus, home to the faculty of Business and Law, whilst the I.M Marsh Campus is located in Aigburth which is a short drive away.

Liverpool Hope University

liverpool hope university

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With the main campus situated outside the city centre in Childwall, Liverpool Hope University gives prospective landlords more scope to invest in property away from the metropolitan area. However, the university has fewer students in comparison with its regional counterparts, numbering around 7,000.

The university was founded on Christian principles but does accept applicants from all faiths. Academically, Liverpool Hope is divided into 3 main faculties – Arts and Humanities, Education and Science – which have been the subject of multi-million pound refurbishments over the past few years.  

The Liverpool Institute For Performing Arts (LIPA)

Finally we come to the Liverpool Institute for Performing Arts, a highly distinguished institution focused on various branches of the arts including music, dance and theatre. The brainchild of Sir Paul McCarthy and opened by the Queen in 1996, LIPA is regularly found near the top of specialist institution ranking tables.

Places are particularly hard to come by, with an acceptance rate of under 5% in recent years. This keeps enrolment numbers down, but because the university doesn’t have associated housing of its own, landlords can still capitalise on the surplus of students looking for private accommodation.

Student Housing Areas

student housing liverpool

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Students across Liverpool tend to congregate in the same areas year on year. Researching these neighbourhoods can be a good starting place for landlords looking to invest in student property.

Students with a higher budget, often from abroad, will usually look to the city centre for their accommodation. The close proximity to their campus, cultural hotspots and other amenities is a natural draw. The number of private residential developments has doubled in recent years, partly because many students are relocating from the outer suburbs.

However, many second and third year students still group together when they move from their halls into one of Liverpool’s outer regions. Within walking distance are the Kensington, Toxeth and Tuebrook areas, popular student-friendly zones. Littered with terraced housing and flats, properties can comprise anything up to 9+ bedrooms.  

Further afield lie Wavertree and Picton, with the notable Smithdown Road a prominent student living area. Rent is generally cheaper here and bus services into the centre are regular. Shops, takeaways and parks are all nearby, all part of the idyllic student lifestyle.

With Liverpool John Moores having a campus based at Aigburth, this is another area to consider investing in. A predominantly residential suburb with local amenities, excellent bus links and Sefton Park nearby, rents are generally higher per calendar month here.  

When targeting the student market, investors should be aware the market is generally competitive, especially in the prime student living areas as noted above. However, investments are often of a low-risk, high yield nature, topped off with instant equity gain.

Student Life

liverpool students

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Liverpool is certainly up there as one of the top university cities in the UK, with an impressive social scene and thriving student community. This is a big draw for applicants who often consider life outside of the lecture theatre.

Students can delve into the abundance of sporting facilities offered by their respective universities. For example, the University of Liverpool boasts a state of the art fitness centre and numerous grass pitches designed for a variety of sports. There are various clubs and societies to join in fact, from traditional British sports to martial arts and rock climbing.

In terms of nightlife, there is literally something for everyone if and when they decide to hit the town. All tastes in style, music and social scene are catered for across many different parts of the city.

Although Albert Dock plays host to many high quality restaurants and cocktail bars, students will likely flock to the more accessible Concert Square with such recognisable names as Revolution, Walkabout and Baa Baa. Medication is another popular haunt, especially on the cheaper Wednesday nights.

With a booming student population and thriving local economy, Liverpool is a haven for student property over a number of areas in the city. Landlords are guaranteed healthy occupancy rates year on year along with high rental yields. However, they must take the correct precautions before investing and stay within their set budget. Taking out the proper landlord insurance is also highly recommended for student properties.

If you enjoyed this blog post then perhaps you’d like to read “A Guide To Investing In Student Property in Newcastle 2015“?

A Guide To Investing In Student Property in Newcastle 2015

With a student population of over 50,000 at Newcastle and Northumbria universities combined, along with a string of colleges in the city, the buy-to-let market is continuously healthy for investors. This guide will take a look at the city of Newcastle and its universities in more depth, along with the most desirable student areas for property investment.

Newcastle

The North East of England is recognised as a friendly and lively region to inhabit, with Newcastle-Upon-Tyne at its economic centre. There is a vibrant nightlife, along with an abundance of supermarkets, shopping centres and high street stores. The cost of living is generally cheaper than other major cities in the UK, and the potential for economic growth remains strong.

The city lies on the northern bank of the River Tyne, a vital historical trading link with the rest of the UK and into the North Sea. Newcastle’s most notable landmark, the Tyne Bridge, crosses the river linking with Gateshead to the south.

Geordies are known for their passionate support of Newcastle United Football Club, based at St. James’ Park right in the heart of the city. With football so dominant in the local mindset, other sports are less followed but still well supported nonetheless. Also notable is the Great North Run, one of the world’s most popular half marathon races.

Newcastle is served well by public transport, with extensive bus and train links providing local as well as national connections. The Tyne and Wear Metro is another distinguishing feature of the city as one of only three light metro systems in the UK. Connections take place all around the north-east region and Newcastle International Airport.

newcastle

Why Invest in Newcastle?

With healthy student numbers each year, landlords are drawn to the Newcastle area for assured yield figures and full occupancy potential. Students often choose to relocate to private houses or flats in larger numbers, meaning that rent figures can be of high value during term time.

Property reports suggest that the north-east has the lowest ratio of rooms to students in the current climate, meaning that a property is very likely to attract tenants once listed. There are many types of accommodation to consider investing in, from city centre apartment blocks to terraced homes in residential areas.

In addition, with the two Newcastle universities homing around 9,000 international students every year, the ongoing demand for upscale accommodation is also high. These types of student, particularly from Asia and North America, typically have higher budgets to spend.

Although the majority of students will look to the outer areas of the city for private rooms, the inner-city market is bourgeoning also. Purpose-built flats with inclusive gyms, communal areas and laundry rooms are becoming more popular, especially with foreign students and postgraduates. Net rental returns are healthy for these types of property, often reaching figures of up to 10% within two years.

Savills is one of the UK’s leading estate agents with a major research scheme highlighting movement in the country’s property market. They rank Newcastle as one of the leading regions of opportunity for student property investors. Return on investment figures are promising and are expected to remain steady in coming years.

Regeneration Plans

Newcastle Council are currently implementing a 15-year regeneration plan so that all communities in the city will benefit from the economic, social and environmental improvements by 2021.

The Ouseburn is one such example of this modern rejuvenation, a development project which will create around new 60 apartments along with a new cycle hub, restaurant, cafe and outdoor public space. The innovative design of the new complex is being showcased as a template for European architects.

newcastle

Newcastle University

Newcastle University has a student population of around 17,000 undergraduates and 6,000 postgraduates. The 50-acre main campus is located close to the Haymarket area of the city and contains of various university buildings, lecture halls, research labs as well as the student union. The three main faculties are Science, Agriculture and Engineering, Humanities, and Social Sciences and Medical Sciences, where there are up to 200 undergraduate courses to choose from.

The university performs well in many of the criteria used to calculate university league tables where it is positioned in the top 30. Students recorded a 90% satisfaction rate with their course, whilst an impressive 97% of former students are employed or in further study six months after graduating.

Northumbria University

A short walk away is Northumbria University, a business-focused and well-respected institution with around 30,000 students in total. It gained its university status in 1992 and has climbed the league tables ever since, making it one of the fastest improving universities in terms of student satisfaction and graduate prospects.

The City Campus is split into two sections; the East buildings include the highly ranked Newcastle Business School, whilst the West buildings contain various Science schools along with the library and students union. The Coach Lane Campus is situated outside of the Newcastle city centre in Benton, although a free shuttle bus provides transport between the two. It is home to School of Health, Community and Education Studies and its own independent student union.

Student Areas

Although most first year students tend to live in halls of residence linked to the university they will tend to look for private accommodation as they progress through the years. This is also the case with postgraduate and international students.

The areas they relocate to depend on which university they attend, along with the whereabouts of their lecture halls and campus. In this sense, investors should look to these student-friendly areas which are highly sought after. We have listed a few here to consider.

newcastle students

City Centre

With the two universities located not far apart in the city centre, many students prefer to remain nearby. An abundance of shops, bars, restaurants, cinemas and music venues are all on their doorstep along with the university buildings themselves. There is a relatively low cost of living compared with the UK national average in inner city areas.

Shieldfield

Shieldfield lies just on the outskirts of the city centre within walking distance of both Newcastle and Northumbria universities. This is an important contemplation for many students who want easy access to their place of study. Student housing is primarily small terraced housing on a small council estate whilst there are also a number of Halls of Residence in the vicinity. Many major supermarkets and local convenience stores service the Shieldfield population.

Heaton

The majority of student homes can be found in Heaton, situated on to the east of the city centre and close to both universities. Buses regularly connect residents to campus buildings and walking takes around twenty minutes on foot. Properties here are mostly Victorian-styled terraced buildings made up of 4+ bedrooms. Local shops serve the area, whilst the Chillingham Road metro station is also close by. Many students also take advantage of the local Heaton Park when the weather is suitable.

Jesmond

To the north is Jesmond, a residential suburb but popular with students looking for a quieter way of life away from their studies. Some properties in the area can be considered upmarket compared to traditional idea of student housing. There are trendy nightspots and classy restaurants on Osborne Road and Brentwood Avenue respectively, whilst Acorn Road contains plenty of shops for everyday needs. Cycle paths provide an environmentally-friendly route into the centre, whilst the Metro system also passes through.

Sandyford

Sandwiched in between Heaton and Jesmond is the lesser known Sandyford, a relatively quiet suburban area again with all the required local amenities close by. On Starbeck Avenue lies the fitting named Starbeck chippy, alongside a quirky café and sandwich shop. Nearby is Archbold Terrace where plenty of bar/restaurants are filled with students both during the day and night.

Fenham

Out the other way lies Fenham, located west of the metropolitan centre and generally less expensive in monthly rent costs. The population is ethnically diverse and commerce is largely Asian based. Students living here often take advantage of the many sporting facilities and nearby gym. Also worthy of note is the public library and swimming pool which are listed buildings, cherished by the local community. Bus services into Newcastle are very frequent and take only around 5 minutes.

newcastle student studying

Student Life

Newcastle is one of the leading student cities in the UK, famed for its friendly inhabitants and exciting nightlife. There is always something to get up to all throughout the week, especially as many establishments offer cheap drink deals to keep students coming.

In terms of places to go, there is something for everyone to enjoy regardless of price, style and music taste. The Diamond Strip has a collection of more upmarket bars and clubs attracting a young, stylish crowd, similar to the fashionable Quayside area. For a cheaper night out, students tend to head to their respective unions or local pubs.

The Gate is a notable complex which includes 12-screen cinema, restaurants, bars, and clubs all under one roof. In addition, the usual big name cinema chains are dotted all across the city showing all the latest blockbuster releases. The Tyneside Cinema is a popular independent establishment presenting a range of cult films, often favoured by students during the day.

Geordies love their live music and there’s always something taking place throughout the week. The Metro Radio Arena, O2 Academy or City Hall play host to the more established acts throughout the year, whilst the Cluny, Riverside and Jazz Cafe are intimate venues with a more chilled out atmosphere.

With student loans at the ready, there are plenty of shopping opportunities in Newcastle also. The Eldon Square Shopping Centre is at the heart of the city centre, buzzing with thousands of consumers on a daily basis. The centre contains over 150 stores, many of them leading high street names, along with a new restaurant quarter. There is also the Monument Mall, Fenwick Department Store and Northumberland Street for further shopping opportunities in Newcastle.

Like most universities, the range of sports and social clubs is extensive at both Newcastle institutions. Newcastle University students can head to Cochrane Park, venue to the more traditional sports of football, rugby and cricket, whilst Northumbria boasts Sport Central, an extremely impressive centre with an array of fitness activities to choose from.

Although up in the north east region, Newcastle isn’t cut off from the rest of the country as some prospective applicants may expect. Extensive travel links provide easy access around the UK, and London is only 3 hours away by train. In addition, the Metro system is a blessing for students without their own transport. Services run frequently throughout the day to and from Haymarket, which is the nearest station to both universities.

 

Liked this article, but want to find out about other cities? Why not read our guide on investing in student property in Leeds.

What To Look Out For When Investing In Student Property

Investment in student property is potentially very profitable, but not all properties are suitable. It is important to know what to look out for with regard to location, market value, type of student accommodation, property management and rental guarantee.

Demand for student property is always highest when it’s in close proximity to a high-ranking university and in cities where there is more than one seat of learning available.

The Best Location

student property location

Photo Credit: Jeff Djevdet via Flickr

The location within such a university town or city is also an important consideration, and the best area will always be one that is the most convenient for students. This will generally be an area that provides good local amenities as well as being within easy reach of the main campus.

Most students prefer living in a central location where there is plenty of nightlife and good public transport connections to other parts of town – as well as to other parts of the country. Student properties on the outskirts of town can be harder to rent out and are generally not worth the investment.

Low or High Market Value

student property market value

Photo Credit: Howard Lake via Flickr

A student property with a low market value has less potential and will provide lower rental income. It is worth remembering that it is not possible for anyone to get a mortgage on any individual unit that is not self-contained, such as a bedsit or studio with a shared bathroom or kitchen, and you have to consider the impact this will have on your exit strategy.

Also, students today expect a higher standard of accommodation than they might have done in the past, so bigger and higher-quality properties are more in demand.

Family Home or Purpose-Built Accommodation

purpose built accomodation

Photo Credit: Wojtek Gurak via Flickr

A home with multiple occupants is known as an HMO (house in multiple occupation) and for some investors, a family house that can accommodate a number of students might be the most affordable prospect.

However, there are more benefits to be gained by owning a student property that has been purpose-built. The biggest benefit is that the return can be as much as 70% higher from a multiple-occupancy purpose built complex.

Investing in a purpose-built, multi-occupancy property makes it possible to get started as a property investor by purchasing one or more single self-contained units within a complex. The cost per unit will naturally be much lower than investing in a complete family home.

Many students prefer to be in purpose-built accommodation too. A typical modern-day student will not be prepared to accept low quality accommodation and they will want to be in a desirable location as mentioned previously.

Fully Managed Student Property

managed student property

Photo Credit: hackNY.org via Flickr

By purchasing a fully managed student property, you will reduce the amount of money and time spent in the future on repairs. A reputable management company will never take on a poor quality property. So, when you purchase one that is fully managed, you will need to check out the reputation of the management company before committing. If it is known to be reliable, you can generally consider it to be a good overall investment. Remember to weigh up the risks verses the rewards of investing in student property.

If the property management company is also responsible for other student properties and the property developer also has relevant experience in student accommodation, there is a better chance of having a stronger return on investment over the long-term.

Rental Guarantee Period

Some student housing developments come with a longer rental guarantee period than others. The length of a guaranteed return will be reflected in purchase price and the best deals will often offer two years or longer.

Taking these points into account while you are searching for the best investment option will stand you in good stead. Simple background checks and a little research will put you in a far better position than you would be to make a solid decision; one that will see you reaping the rewards from your investment for many years to come.

If you enjoyed this blog post then perhaps you would like to read “5 Mistakes Property Investors Make“?

Feature Image Credit: Flickr

5 Mistakes Property Investors Make

5 Mistakes Rookie Property Investors Make

Property investment can be fraught with pitfalls for those just starting out with property investment.

In this article we take a look at the most common pitfalls so you can avoid them.

It is important to note that there isn’t always a guaranteed formula for success in any kind of financial investment. However, there is certainly an almost foolproof plan to avoid making significant and unnecessary mistakes when investing in property.

To help prospective investors avoid these potholes, we’ve compiled a list of the 5 most ill-informed, amatuer and ultimately easy mistakes that property investors make.

It is true that many opportunities for reward don’t come without their risks.. However, our list below aims to help minimise the risks associated with actions and choices made in property investment.

We identify the nature of the mistakes and explaining why they are detrimental to both your finances and investment portfolio.

Whether you’re already an investor, considering a career in property investment or just interested in finding out more, check out our list of the 5 rookie mistakes below.

1. Not Doing Your Homework

Research is absolutely vital for any kind of professional and/or financial investment.

Many rookie property investors will enter the market without sufficient thinking, and get caught up in all the excitement and make bad decisions.

Frequently they end up buying a property with no background research having been undertaken.

Failing to do your background research is a very common mistake. Points to research include:

  • average rental yields for an area
  • the rate that prices are going up in the area
  • average time taken to let property in the area
  • crime rates and other adverse factors within the area

However, background research starts before considering your first investment property.

Read books, relevant blogs and any material that will expand your knowledge. Do you know what a section 21 notice is? How and when to serve them to a tenant? This is the type of thing a would-be property investor needs to learn about first.

Once you have your background knowledge in place it is time to the move on to researching your opportunities.

Research the area and the type of property you’re looking at. What the market rates are and the average profit yield (short and long-term). This will enable you to make forecasts and predictions on your investment.

2. Home Bittersweet Home – Looking for a Dream House

Picking a property based on your own taste is a common beginner’s mistake.

This is a frequently made mistake in the property investment industry, but one we can all relate to.

When we view a house, car or even visit a restaurant, most of us automatically form a personal opinion on it in relation to our preferences, conveniences and tastes.

However, when buying property to then let out you can end up missing out on a great investment purely because you couldn’t envisage yourself or your family living there.

With investment property it is not your own tastes you are buying for.

For example, you might only want a property with space to park your car(s). However if your target market is students most of them will not drive. A lack of parking may be no issue at all to tenants who predominantly walk or use a bicycle as their main mode of travel.

When it comes to interior decoration, you may be put off a property because it isn’t your favourite shade of purple. In actual fact, neutrality and an overall cream/white presentation is the best thing to go for when trying to appeal to the mainstream tenant market.

After all, a blank canvas can allow an imagination to blossom and decorate the home in their own style preemptively, as opposed to being dissuaded by a finished project built in another’s own image.

3. Love Thy Neighbour (with a pinch of salt)

Picking a good tenant is very important.

Get references and select the tenant based on business decisions. A good example is whether they have good credit rather than whether they seem to be a nice person.

I know this sounds painfully obvious, but it’s easy to rent your property to someone you’ve enjoyed talking to over someone you didn’t.

In general you should avoid building a close rapport as this can lead to a perceived lack of authority. Over friendliness can lead the tenant to pay rent late and never expect a rent increase due to the sacred code of “mate’s rates”. Things could also get awkward if you eventually decide that they need evicting! All unneeded, unnecessary stress.

Trust in others is also important because you shouldn’t find yourself…

4. Going Solo

Make sure you have a good team around you.

Even after years of research in the property investment market, it’s important to realise that you aren’t going to be able to do it all by yourself (despite how much you’ve learnt).

As with nearly every successful business model, you’re going to need a reliable and trustworthy team around you that can perform their roles to a very high standard.

If you can’t afford to hire a team at your beck and call, you should look to find information and establish a professional network of contacts.

These can include a letting agent, a home inspector, a closing attorney and a financial backer; both for your own deals and to assist with financing for prospective buyers.

Arguably, the most important occupation to acquire is a property manager. They generally won’t affect your budget too much and they provide a deduction on tax payments.

Property managers can be utilised through a delegation of many tasks, including sorting out maintenance, paying the bills on your behalf and preparing your monthly and financial end of year accounts.

Acquiring a property manager can save you an abundance of priceless time which you can instead use to research more properties and find your next big deal!

Our final pitfall that many rookie property investors don’t even realise they’re falling into is:

5. Not Keeping Good Options Open – Overlooking Opportunities Outside The Biggest Cities

It’s safe to say that you will need to look outside of your comfort zone, however most investors will ONLY look in big cities for properties due to the high demand from professionals and students looking to live there (not to mention that international students put over £10 billion into the UK economy each year).

Sure, there’s still good money to be made in the likes of London and Manchester.

However, focusing all your time and efforts on a small cluster of highly-competitive cities is a slightly rigid blueprint in the present day when other cities are growing all the time and aren’t yet saturated with swarms of new property investors.

For example, Leeds is the latest city to become regarded as an affluent metropolis of scholars, students and businessmen.

Use the knowledge you’ve acquired of your local area to see if there’s any potential property goldmines (near higher education facilities, low-crime rate, beautiful scenery, good value properties) that haven’t yet been tapped into by the swarms of seasoned property investors.

Of course it’s not advisable to only look locally, but you shouldn’t limit yourself to the main illustrious cities that you can count on one hand; do your research and get a good team around you to help you find the property, in the right location, and at the right time.

Look to Spain for Bargain Properties

Thinking of buying a home in the sun? Look to Spain for bargain properties as housing crisis comes to an end say experts

Prices of homes on the Mediterranean coast rose 0.2 per cent in March

First increase since January 2008 – since when average values across that region have fallen by 48%

Bargains galore: Zoopla advertising four-bedroom townhouse in Almeria for £19k

After what seems an eternity, it’s over. No, I’m not referring to the General Election, but the long-running Spanish housing crash.

‘After seven years of consecutive declines we’re starting to see signs that Spanish house prices have bottomed out, and even started to rise in some segments,’ says Mark Stucklin, the Barcelona-based British editor of Spanish Property Insight, a website for buyers.

Tinsa, a Spanish valuation service, says prices of homes on the Mediterranean coast rose 0.2 per cent in March – the first increase since January 2008, since when average values across that region have fallen by an extraordinary 48 per cent.

Spanish property - Mallorcan coast
Sunny forecast: The Spanish economy is picking up so consider investing in an apartment such as these on the Mallorcan coast

That’s not all. Spanish house building is finally under control, with planning applications for new homes just 4 per cent of the level in the boom days of 2006.

Spanish banks, which once had a million repossessed homes, now have a reasonable 120,000. All that is translating into buyers returning to find a dream home in the sun.

There are bargains galore. Zoopla is advertising a four-bedroom townhouse in Almeria for £19,200. A two-bedroom apartment in an Alicante city block, complete with communal rooftop pool, can be yours for £25,100.

Even the high-end estate agents such as Savills and Chestertons are now selling new flats on the Costa Blanca for well under £120,000 each.

Agents say most British buyers are particularly attracted to the Costa del Sol thanks to 20 flights daily from the UK to Malaga.

Spanish property - Alicante, Las Brisas de Alenda
Bargains: 3 bedroom, 2 storey townhouses in this new development in Alicante, Las Brisas de Alenda, go for £105,604 through Savills

Coastal properties in established resorts and developments are selling for just £40,000, while high-end purchasers look at the cities – especially Valencia and Barcelona – and favourites like Mallorca and Menorca.

And experts are confident this upturn will last, with some buyers making commitments not just for get-rich-quick new-build schemes, but serious restoration work.

‘In prime areas, we see a substantial increase in older homes bought for refurbishment or total renovation,’ says Michael Corry-Reid of Aylesford International, an agency with offices in Spain.

But be careful if you need a loan to buy your villa, flat or finca. The Spanish mortgage system is stricter than the UK’s and particularly hard on self-employed borrowers.

‘An option may be to extend the mortgage against your UK property and use the money to buy in Spain,’ says Miranda John, international manager at broker SPF Private Clients.

As always in Spain, care must be taken over tax and legal issues. Agents advise buyers to use only experienced lawyers and not to sign documents in a language they do not understand.

Allow 10 per cent of the purchase cost for property tax, notary and land registry bills and the cost of switching on utilities. On new-build homes, you may have to pay VAT, too.

But the holiday home dream could be back.

Original article written by Graham Norwood for Daily Mail

Investing In Student Property in Leeds

A Guide to Investing In Student Property in Leeds

Our guide to student property in Leeds aims to give prospective investors an insight into the fantastic opportunities available in this constantly evolving part of West Yorkshire. We’ll take a look at the local area and its economic development, as well as exploring why the many opportunities for further education in Leeds are capable of attracting students from all over the world. Let’s jump straight in.

Leeds at a glance

The West Yorkshire city of Leeds has seen some dramatic changes over recent years. The former mill town has developed into a buzzing cultural hub and the youthful urban scene is a major contributing factor to the city’s growing popularity with students.

With a population in excess of 750,000, Leeds is the third largest city in the UK and it boasts the fourth largest urban economy, trailing only to London, Manchester and Birmingham.

Transport links to the city are good too. Leeds Bradford International Airport is a mere 7 miles northwest of the city centre and the road network includes M62/M621 for easy access to Manchester in the west and Hull in the east. The M1 can be picked up south of the city too, conveniently connecting this part of West Yorkshire with The South.

Local economy

One of the biggest changes the city has seen over recent years is the driving force behind its economy. Once predominantly a manufacturing city, Leeds has now flipped over to become a largely service-based economy. The financial and services industry was reported to be worth £2.1 billion back in 2011 and with around 150 law firms in the city, Leeds is now widely regarded as having a legal market second only to London.

Banking is another huge player in the overall economy of the city. Leeds has over 30 national and international banks based within its boundaries, many of which are extremely large operations. First Direct, for instance, has its headquarters here.

Despite the dramatic change from manufacturing to the service sector, Leeds is remarkably still the third largest manufacturing centre in the United Kingdom. Around 1,800 manufacturing firms are based within the city, employing in excess of 39,000 workers (just under 9% of the entire city’s workforce); however many of the traditional industries, such as wool mills and iron foundries, have now been replaced by modern businesses. Amongst the biggest in the area are chemical and medical technology providers, printing and publishing houses and many companies from the food and drinks industry.

Retail is another huge contributor to the city’s economy. Several large shopping centres can now be found in and around Leeds and it is thought that the figure for those working in retail is now well over 40,000. However, 75% of those in the retail sector are no longer based in the city centre itself; further proof of the changing economic landscape of the region and the country as a whole.

Urban regeneration

Leeds has changed beyond all recognition over the last 30 years or so. Many of the formerly rundown areas of the city are now pristine and they’re attracting young professionals in their droves. Thanks to the changing face of the economic sectors driving the city’s growth, Leeds now has a new dynamic that is bringing in (and retaining) some of the United Kingdom’s brightest talent.

Areas such as the banks of the Leeds-Liverpool canal have been transformed, with many new properties adorning the towpath alongside fabulous renovated warehouse dwellings. City professionals are now able to live within a stone’s throw of their offices, and the knock-on effect to other properties in the area has been positive.

Proposed developments

Leeds City Council has put forward plans to change the housing landscape of the region over the coming decade. The city’s current housing shortage is expected to worsen over the next few years as demand grows at an unprecedented rate.

The proposals, which were made in early 2015, would see an additional 66,000 homes built in the city by 2028 – an investment that would certainly benefit the city as a whole. However, many of the proposed locations have been seen as controversial and have even been met with resistance from some quarters.

If the proposals do go through, further investment in the local infrastructure is expected to follow. The prospect of new schools, transport links and improved healthcare facilities could see demand rise further still in the city.

Why choose to invest in Leeds?

As one of the three points that make up the ‘Golden Triangle of The North’ or ‘Betty’s Triangle’ (named after the famous tearooms) as the locals affectionately refer to it, Leeds is an investor’s paradise.

Thanks to the booming financial district, Leeds has become an extremely affluent city. Corporate giants such as RBS and Direct Line have boosted the West Yorkshire city’s economy no end and they’ve created a buzz that has attracted canny investors from this country and abroad.

Much of the renowned Golden Triangle’s (with Harrogate and York being the other points) property portfolio performed very well during the economic downturn. In fact, many properties saw an increase in value when the rest of the country was struggling to maintain theirs.

Where other towns and cities in the north rely heavily on attracting tourists to boost the local economy, Leeds’ wealth is predominantly home-grown. As more and more companies like Asda Walmart, Capita and First Direct choose to base their headquarters there, so the talent pool grows. Even the Bank of England has its second office here!

Alongside this is a growing international airport that connects the city to America, Europe and North Africa, as well as great road and rail links to the rest of the United Kingdom. Proposals have also been made to build a HS2 station as part of a massive regeneration project that will see Leeds South Bank completely transformed.

Investing in Leeds is an opportunity not to be missed. The city’s educational facilities rival many of the countries other seats of learning and the burgeoning economy looks set to retain many graduates once they complete their degrees. This increase in talent can only push Leeds’ already thriving city economy further forward over the coming years.

The city’s seats of learning

Leeds boasts three universities as well as many other institutions offering further education to those from the city and beyond. In fact, the student population of the city is ever growing and a good percentage of those studying in Leeds are foreign students – prime candidates for the rental market.

To get a better feel for the city’s educational landscape, let’s take a look at the three universities in a little more depth:

University of Leeds

The University of Leeds is the largest of the three in terms of student numbers. Over 30,000 people study here, making it the eighth largest university in the UK with respect to those who pass through its doors each year.

Situated within walking distance of Leeds city station and the city centre, this university has students from all over the world within its community. Former students have come from 186 different countries across the globe and there are currently 146 different nationalities studying here.

Students are not the only ones to benefit from the University of Leeds’ existence. The local community is helped out by around 2,000 student volunteers and it is estimated that £1.23 billion is pumped into the local economy each and every year. There is also an additional £211 million spent by students per year on rent and living costs.

The University of Leeds has an extremely proactive student union with over 250 clubs and societies in operation. They are also the only student union in the country to have received two gold standard awards for the Students’ Union Evaluation Initiative.

Leeds Beckett University

The second largest university in Leeds, Beckett has two campuses; one located in the city centre and the other in nearby Headingley. Formerly known as Leeds Metropolitan University and Leeds Polytechnic, Leeds Beckett has over 28,000 students on its books and is a major contributor to the local economy.

An estimated £477 million is contributed year on year from the university into the economy and they employ around 2,900 members of staff. Just as with the University of Leeds, students travel from far and wide to take their place and there are currently students from almost 100 different countries studying a vast array of subjects.

The university has an outstanding success rate too for those who have studied there. A survey undertaken by Destination of Leavers from Higher Education (DLHE) showed that 95.5% of UK postgraduates were either in work or higher education six months after leaving the university.

Leeds Trinity University

Based in Horsforth, Leeds Trinity University is the smallest of the three universities by quite a margin. Nevertheless, with only 3,000 students, Leeds Trinity punches above its weight in terms of success and satisfaction.

The Sunday Times ranked Leeds Trinity in the top 10% UK institutions for teaching excellence and the overall satisfaction of students is high at 86%, above the national average.

Leeds Trinity has recently stated that they aim to deliver growth in the amount of foreign students that they serve by establishing international partnerships with other like-minded institutions across the globe.

With so much interest in the city’s educational facilities, it’s little wonder that the student property market is seeing such impressive returns on investment.

Student life: Why Leeds is so popular

As we’ve already touched on, Leeds is on the up. The city has shed its once dour image and is fast becoming one of the UK’s cultural hotspots. Couple this with the fantastic further education opportunities on offer and it’s easy to see why students are choosing Leeds over many of the other major university cities in Britain.

Let’s take a look at some of the reasons why students are making Leeds their first choice:

Things to do

With its rich and long established heritage, Leeds is an amazing place to live. For those with a passion for a little retail therapy it’s hard to beat, and many regard Leeds as one of the finest shopping cities in the north of England. Shopping centres are plentiful, but there is also a large community of independent traders with vintage stores and tiny boutiques popping up across the city.

Food is another draw. Forget the chain restaurants (although they’re all here), once again it’s the independents that steal the show. Cafes and small family run restaurants have some incredible edibles to keep even the most ardent foodie happy.

Leeds also has a good selection of cinemas too; from mainstream blockbuster screeners through to more low-key productions shown at the very highly regarded Hyde Park Picture House – there’s something for everyone here.

For those looking for a sportier way to pass the time, Leeds doesn’t disappoint. With plenty of places to play and watch all manner of sports (the football and rugby teams being particularly famous), students can fill their time easily in and around the city.

After dark

Naturally, students are going to flock to a city with fantastic nightlife and Leeds certainly provides that. As with the many daytime activities, the nightlife in the West Yorkshire city is eclectic and interesting. Chain establishments sit side-by-side with quirky bars and clubs, making Leeds one of the finest cities in the UK for a night out.

Live music has a great scene here too. As well as being the joint host of the annual “Reading and Leeds festival”, Leeds also boasts the O2 Academy (just off Millennium Square). To cap it off, Leeds is home to a multitude of smaller music venues that give the city the diversity so many students crave.

The Best Areas To Invest In Student Property In The UK

Anyone who has been paying attention to the property investment market over the last decade will be able to wax lyrical about the benefits of investing in student property over a standard buy-to-let arrangement. However, something new is happening. Nowadays it’s not just hardened property investors who are looking towards student digs as a potential goldmine – others are catching up too.

Demand is high

With an expected yield of anywhere between six and ten percent, this shouldn’t really come as a surprise. Money savvy people are always on the lookout for the next big thing and the only real shock is that it has taken many of them so long to cotton on to what’s going on here.

Student property investment is now a huge business and it has, over the last three years alone, become a £2 billion industry in the UK. With the government lifting the cap on the amount of students any given university can take on from 2015/16, this figure is surely set to increase significantly over the coming years too.

In August of 2014, just shy of 400,000 students booked their place into a UK university. This record-breaking figure was in large part thanks to the the abolition of capping student numbers when the government introduced 30,000 new places across the country.

However, many analysts predict that this number is likely to be dwarfed when the cap is lifted fully. Some are forecasting an additional 60,000 students will become part of the system, but UCAS (Universities and Colleges Admissions Service) revealed in February that they have, in fact, received 600,000 applications for university places – a jump of over 200,000.

International students are among the new recruits

Another additional piece of good news for those in the student accommodation market is the surge in foreign students taking up full-time education in the United Kingdom. A recent report (Universities UK Patterns and Trends in UK Higher Education) showed that student numbers from non-EU countries has increased dramatically over the last 10 years; 59% more students from these countries are now studying here, the findings said. This increased demand can only be good for investors, and many local councils are placing student accommodation at the core of their planning policies.

Further pressure on an existing problem

The housing shortage in the UK is already causing headaches for the powers that be. Predictions for the coming few years will not ease their pain either, with some experts forecasting that there will be a shortfall in excess of over one million residential homes by 2022.

These reports are likely to work in the investors favour too. Councils are now expected to place a cap on the conversion of residential properties into student accommodation in an attempt to slow down the ever-increasing shortfall.

Does this mean that all student property is worth investing in?

The short answer to this is a resounding ‘No’. As with any property investment, student accommodation still requires a certain amount of planning and research. As corny as it may now sound, location, location, location is still a huge factor in determining whether or not your investment is likely to be a sound one.

This is where the UK based investor holds the trump card. The vast majority of the student property market is awash with overseas investment and their money is predominantly focused on the major cities: London, Birmingham, Liverpool and Manchester, for example.

The main problem of investing in the bigger UK cities is that because of the overseas investment many of the prices have become inflated. Sure, you’ll still see a return as the market audience is so saturated, but sometimes one of the more overlooked student destinations may be more profitable. While there are still undoubtedly good investments to be made in the big cities, purely because of where they are and their stability, there are often better opportunities for those with a little more local knowledge.

So, where should I be looking?

Well, first of all, consider places that you know intimately. If you have a feel for a place already, why look elsewhere? Concentrating on areas where you have a greater knowledge than outside investors can often turn up some unexpected bargains. If you already live in a university town, take the time to do a bit of digging and you may be pleasantly surprised with what you come up with.

For those who are looking for a starting point for their research, we have compiled a top ten for you here. Yes, a couple of the big cities previously mentioned make the cut, but that shouldn’t stop you from investigating places that overseas money has yet to reach.

Without further ado, let’s take a look at some of the hottest destinations for student accommodation investment opportunities available today:

Coventry

With an average headcount of over 35,000 students per year making use of Coventry’s higher education facilities, this city offers a growing opportunity for investors.

Leeds

Once the manufacturing hub of Britain, Leeds is now home to an ever-growing financial district that is currently booming. However, there are still bargains to be had here and regeneration of key areas is likely to see house prices rise over the coming years.

Glasgow

Scotland’s largest city has mysteriously remained relatively untouched by overseas investment up until now so if you do your homework you could be on to a winner here. A lot of graduates are starting to stay in the city meaning that the feel of the place is getting younger and more vibrant, making Glasgow a magnet to future students.

Nottingham

If you want to talk about location, Nottingham takes some beating. Pretty much slap-bang in the middle of England and close to the M1 for access both north and south, Nottingham attracts students from all over the UK.

Oxford

Property prices in Oxford are through the roof, but that doesn’t mean that this world famous university city should be completely disregarded. This is generally down to the fact that rental prices are well in line with property prices, in many cases a decent 6%+ yield can still be made here.

Leicester
Leicester offers possibly the best value university city dwellings available in the UK today. Reasonable prices coupled with high demand means that with a little homework and research, you could find yourself a very decent deal indeed. However, it’s worth bearing in mind that the yield is likely to be lower here thanks to the overall prices in the area.

Reading

Not far from the nation’s capital is Reading, and there are still some great deals to be had here. The University of Reading is growing in popularity and the town is also home to a campus of the University of West London, so demand in the area is good.

York

Part of the ‘Golden Triangle of The North’ along with Leeds and Harrogate, York is seen as up-and-coming in the eyes of many investors. Recent expansion to the university and the already brilliant transport infrastructure make this city one to look out for.

London

The capital was always going to make the top ten, regardless of how much money has already been poured into it. London just oozes stability and even through the recent downturn, house price remained pretty much rock-steady. Plus, if ever there was a draw for overseas students, London is it.

Manchester

Another of the big boys makes the cut and, again, it’s hardly surprising. Manchester is home to over 50,000 students and demand for accommodation is often ridiculously high.

There you have it, a top ten of the best areas in the UK to invest in when it comes to student property. Keep in mind the cap being lifted in 2015/16, and if you look out for universities that are currently undergoing expansions, or making plans to at least, you might just be able to find yourself a decent investment for the future.