In September, the Government unveiled its new ‘Graduate Route’ visa initiative, which will allow potentially thousands more international students to remain in the UK for a longer period after graduation. This, in turn, could lead to a boom in the student and young professional rental market.
What is the Graduate Route?
Under the current system, introduced in 2012, international students are only given four months to find long-term employment after graduation before they must leave the country. The new Graduate Route will increase this period to two years. It will be open to students who have successfully completed a degree at University and who have a valid student visa when they make an application.
There will be a small fee and applicants will have to pay the Immigration Health Surcharge. All students who apply will be subject to identity and security checks. Graduates will be allowed to work in any sector at any level, and may switch into the skilled work route if they meet certain requirements.
The change will affect students from the 2020/21 cohort onward.
Boost for HMO Landlords
Whilst the new visa rules come as a huge boost for employers and universities, it is likely that they will also prove profitable for HMO landlords, given that the vast majority of students and recent graduates rent, rather than purchase, their own homes.
There are currently around 450,000 international students obtaining an education at British universities, worth a reported £26 billion a year to the UK economy. An increased demand for a UK education will further drive the clamour for student properties. Prudent property investors and landlords should therefore consider expanding their portfolios now, in time for the new rules’ full rollout.
Landlords who already own a number of houses should consider improving their properties in line with international students’ desire for high quality accommodation. To compete with the Purpose Built Student Accommodation (PBSA) market, which is becoming increasingly upmarket, landlords ought to provide more home comforts in their properties, such as washing and drying machines, TV’s and a fast internet connection. They should also consider fitting higher grade fixtures, fittings and furniture. Although this might be somewhat expensive, it will increase yield long term, as a higher rent can be demanded for such properties.
There are already student and recent graduate property hotspots throughout the UK. Although the city with the greatest draw is unsurprisingly London, investors should be wary of investing there, given that high purchase prices lead to low yields. Investors should instead consider the North West, especially cities such as Liverpool, Salford and Manchester. The latter attracted 13,750 students in 2017/18, according to figures from the UK Council for International Student Affairs. Numbers in Liverpool and Salford were similar. The Mistoria Group is able to source properties throughout these cities. There has never been a better time to invest with us.
Investing in HMO Properties with The Mistoria Group
If you are interested in purchasing an HMO, speak to the experts in high yielding property investments in the Northwest, The Mistoria Group. Call the team now on 0800 500 3015.