Tuition fee rise to impact buy-to-let investments?
The rise in student tuition fees could mean that those looking for UK investment property should steer clear of the student market.
Although student rented accommodation is still a large and profitable business in the UK, it has been warned that the raising of 2012 tuition fees to as high as £9,000 a year in many cases could see a drop in the number of young people who choose to go to university.
This in turn could see a fall in demand in students for rented property, meaning some landlords may want to diversify their portfolios away from the student market.
New figures from the University and Colleges Admissions Service would seem to confirm these fears, revealing that the number of university applicants for the next academic year has fallen to 69,724, down from 76,612 at this time last year.
The slump is believed to be the highest ever drop off in student applications.
Commenting on the figures, Graham Kinnear, managing director at tenant eviction service Landlord Assist said: "We've been urging landlords for a while to look at their portfolios and acknowledge the need, where it exists, to look away from a dwindling student market and start renting to professionals.
"The commencement of the £9,000 university fees has only accelerated an existing issue facing student landlords in that the number of 18-year-olds is declining and is expected to continue to do so for the next decade."
Stephen Parry, the company's commercial director, added that although student rentals have historically been lucrative for landlords, a reduction in student numbers will result in additional void periods which will impact the landlord's average annual return.
"Many landlords will have no choice but to rent their properties to non-students or they may have to consider leaving the market in its entirety," he said.
Landlords may wish to instead invest in other high-yield buy-to-let properties.
According to recent data from buy-to-let mortgage provider Paragon, young singles provide landlords with the highest rental yield after students, with an average yield of 6.22 per cent.
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