A report from RICS suggests that residential rents are going to grow faster than property prices between now and 2022 – by as much as 25%. The report highlights the imbalance between the pool of rental stock and continually growing demand.
This is positive news for our property investors, as when residential rents rise, rents across the board will follow suit. With rents in the Purpose Built Student Accommodation sector having outpaced residential property for a number of years, sizeable growth can be expected.
Investors being turned off buy-to-let property
One contributing factor to the residential shortage is the range of hard hitting government legislation, which has turned many property investors away from the buy-to-let sector.
The increase in Stamp Duty and the introduction of surcharges last year, the tightening of landlords’ tax allowances and stricter mortgage conditions have led a significant number of buy-to-let investors to quit the rental market altogether.
But the student property and serviced apartment sectors remain unaffected by such measures – unaffected, that is, except for the very welcome upward trend in rental income.
The reason Emerging Property can offer high NET yields of 8-10% fixed for 10 years is because our partner developer’s unique business model is based on steady rental income gains long into the future – rather than fast buck instant gratification.
This update from RICS is further vindication of this measured strategy, as thousands of our buyers across 17 developments will testify.