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Discover why serviced apartments are the new buy-to-let
  • 8-12% NET annual yields
  • 10-year fixed income agreements
  • Professional onsite management
  • Full legal ownership
  • Zero costs for 10 years
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Frequently Asked Questions

Buy-to-Let v Purpose Built Student Accommodation

Why is Stamp Duty lower with Purpose Built Student Accommodation?
The government responded to the UK’s growing housing shortage by increasing stamp duty on buy to let properties. The 2016 Budget lowered Stamp Duty responsibilities for non-residential property, a category that includes Purpose Built Student Accommodation.
Why is PBSA a more hands-off form of investment?
PBSA benefits from management companies that operate out of offices onsite around the clock. They handle all marketing, maintenance and housekeeping, enabling buyers to simply sit back and wait for their returns to arrive each quarter.
Why are maintenance costs lower with PBSA?
PBSA owners have a NET income with no additional costs for 10 years. The large size of developments means that management companies use economies of scale to buy replacement furniture, fixtures and fittings in bulk, driving down costs.
Why are PBSA returns higher?
PBSA benefits from higher rental and occupancy levels, at a national average of 99% (CBRE data). The large number of rooms in PBSA developments enables the management to capitalise on economies of scale to drive down start-up and running costs.
What’s the difference between BTL and PBSA?
Buy-to-Let properties tend to be residential home conversions and are legally classified as Homes in Multiple Occupancy (HMO). PBSA tend to be large, apartment block developments with round the clock onsite management and an excellent range of modern facilities.

10-year fixed income periods

What happens after 10 years?
Buyers retain full ownership of the property. They can choose to sell it, renegotiate terms with the developer or manage their unit independently of the wider development.
Why is it better to have a longer fixed income term?
Unlike shorter income periods, a developer cannot artificially inflate the purchase price to cover the outlay of returns. A 10-year fixed income period is evidence that the buyer is paying a competitive price for the property, and that the buyer’s interests are aligned with the developer.
What tax am I responsible for?
Buyers have Stamp Duty responsibilities only if they buy single or multiple units valued at £150k or more. They are also responsible for annual income tax payments, with the exact amount dependent on UK self-assessment regulations.
What costs do I have to pay during the fixed income period?
None whatsoever.
What is my relationship with the developer?
A 10-year fixed income period is evidence that your interests are the same as the developers’, who are ultimately responsible for the delivery of yields. They work to ensure the property’s profitability from purchase through to resale.
What happens to the fixed income period at resale?
The remainder of the term is transferable at resale. A 10-year fixed income period allows you to offer attractive returns to a new buyer for a property with proven performance levels, while profiting from strong capital growth.

Purchase

Why can’t I get finance for PBSA?
Banks do not provide finance for Purpose Built Student Accommodation because of the small size of the units and their lack of private social spaces. They also lack the control they normally seek from an investment – since it is tied to the developer, the management company and, separately, to the tenant.
How and when do I receive my returns?
While this may vary slightly from property to property, funds are generally paid into the buyer’s bank account each quarter in arrears - in the case of the Westbeach Serviced Apartments, for example, payments are biannual. This is an automatic payment, so once you have provided your bank details, you simply need to wait for the money to arrive.
What after-sales care do you provide?
Any purchase of a new build property will be followed by regular construction updates and site photography. All our buyers also receive updates on market shifts relevant to our properties. We have a dedicated after-sales team who will answer all your queries and liaise with the solicitors every step of the way to ensure a prompt, stress-free exchange.
Our legal partners offer comprehensive advice. They are one of the UK's largest commercial property firms and a member of the UK Law Society. Clients are provided with an experienced property lawyer, available at a fixed, capped rate.
Is it possible to visit the site?
Site visits can be arranged throughout the year but need to be organised in advance. The developer and property agents will be available to answer any questions you may have, along with the management team in operational properties.
Will I own the property?
You own the property with a 125 to 250-year leasehold ownership agreement, registered at the Land Registry.

Developer

How does the developer make a profit?
The developer makes a profit from rental increases during the fixed income period, and from the management company’s ability to sustain occupancy levels and drive down running costs (which remain efficient during the 10-year term because of the large economies of scales that they operate under).
What experience does the developer have?
Beyond their experience in the residential property market, which dates back to 2001, our partner developer entered into their current focus sectors about half a decade ago. They are the UK’s only NHBC certified student property developer, and have so far brought 17 student properties and one large serviced apartments development onto the market. They have completed on schedule each and every time, but more importantly have delivered the agreed yields– read more
How can I trust the developer?
The same way we do. Our developer is a Top 400 residential build company which has won a national NHBC award for build quality. All its new build properties are protected by an independent 10-year RICS structural warranty.

Management

How do I know they’ll manage the property effectively?
The interests of the management company are exactly the same as yours; they are incentivised to ensure 100% occupancy and to nurture rental growth for the developer.
What experience do Mezzino have?
Established in 2010, Mezzino manage over 1,900 student rooms across the UK and are responsible for the collection of over £9m in rent from a property portfolio with a total value of over £80m. They are also recognised by Accreditation Network UK.
Who manages the property?
The developer is ultimately responsible for management, and they install a specialist company to handle this on their behalf. This company works under a performance-based contract and can be replaced at any time if they fall short of expectations. The current management company is Mezzino.

Resale

Will Emerging Property help with resale?
We will be happy to advise you on a suitable valuation in order to maximise profit and attract a new buyer. We have a large database of active buyers from around the world, and usually aim to resell a property within 4-6 weeks.
How much will my property be worth at resale?
You can set the value of your property at resale. The value of commercial property is based on its ability to generate income for the buyer. The high NET yields allow the buyer to offer attractive terms at resale alongside strong capital growth levels.
What are my chances of selling for a profit?
Properties in the UK generally double in value every 10 years. The chances of making a profit with commercial property are even better, however, as their value is based on inbuilt yield-driven capital growth.
What is the health of the student property resale market?
According to Savills UK Student Housing Report 2016, 80% of total trading involved operational properties, with a total value of £4.75 billion. This shows the level of demand for properties with proven income generation and performance levels.
Will my property be attractive at resale?
New buyers will be attracted to a low-risk property with proven performance. Our high yields and sector-leading long fixed income periods ensure you will be able to offer more favourable terms than those which can be expected from many off-plan developments on the market today.
When can I resell my property?
Buyers can resell their property at any point during the fixed income period, from exchange of contracts to 10 years later when it ends.

Have a question? Ask the team...

30 Comments
  • Default Avatar

    Chris Cole - 15/07/2017

    Reference no charge for furniture replacement …. does each unit come furnished and is this an additional initial cost?

    Reply
    • Emerging Property Avatar

      from Emerging Property - 17/07/2017

      Moderator

      Chris, yes, each unit comes fully furnished, fitted and ready for students. This is included in the purchase price, as are any replacements or repairs over the 10-year fixed income agreement. We say there are no further costs during this period and we mean it.

  • Default Avatar

    Adam - 13/07/2017

    I am in the US, do I pay taxes in the U.K. and US if I invest in these properties? Also, how does currency fluctuations impact my yield?

    Reply
    • Emerging Property Avatar

      from Emerging Property - 17/07/2017

      Moderator

      Hi Adam – all UK property which delivers a rental income is liable for UK tax, though the dual tax agreement with the US was passed to make cross-Atlantic dealings such as this all the easier. We can recommend accountants that we have been using for many years, who can help you with detailed tax planning.

      You may be eligible to receive a tax-free allowance of £5,000 or £10,000, meaning that the first £5,000-10,000 of income could be free of tax; thereafter the tax rate is 20% up to a high threshold of around £40,000 per annum.

      In terms of currency fluctuations, your income will be paid automatically into a bank account of your choice every three months. If you have a sterling account, this means that you can leave these funds to accumulate while waiting for the best possible exchange rate to present itself, before transferring your income into US dollars.

  • Default Avatar

    Liz Simmonds - 13/06/2017

    Im a director and sole shareholder in a limited company. Could I purchase through the company or does it have to be as an individual?

    Reply
    • Emerging Property Avatar

      from Emerging Property - 23/06/2017

      Moderator

      Hi Liz, thanks for getting in touch; yes, you can buy one of our property investments through your limited company, and this approach is fairly common among our clients.

  • Default Avatar

    Tim Reader - 11/06/2017

    If I was to buy one of the Ilfracombe Hoseasons holiday apartments and wish to sell after 5 years could I include capital growth in the asking price and still offer the purchaser an attractive return for the remaining term?

    Reply
    • Emerging Property Avatar

      from Emerging Property - 16/06/2017

      Moderator

      Yes Tim, you most certainly could. You hold full legal ownership of your property and can sell at any time – with complete control over the price you set.

      Any investment with annual NET yields above 7% will always remain an attractive investment for potential buyers – even more so if these yields are – a) proven, and b) contracted.

      As the remaining term of your 10-year fixed income period is fully transferable at resale, your property will be appealing to new buyers even with up to 40% capital growth.

      For instance, if you were to sell your serviced apartment within the first five years, you could pocket 40% capital growth through yield compression while offering new buyers an initial 7.14% NET annual income, rising to 8.57% (after the contracted yield increase in year 5).

      After year 5, the same 40% capital growth would see the new buyers receive an immediate 8.57% NET.

      As mentioned, you are free to set your asking price at resale, with the speed at which you want to sell the major factor in this.

      Emerging Property are always happy to provide a resale service to our clients, marketing your property to a large pool of active investors worldwide.

  • Default Avatar

    L. Morris - 27/04/2017

    Good morning. I’m interested in buying, but what protection would I have if your company went into administration?

    Reply
    • Emerging Property Avatar

      from Emerging Property - 13/06/2017

      Moderator

      Hello, Lindsey – in the hypothetical situation where something were to happen to the developer or the management company, you the investor would still be the owner of an income-generating property – as in any other real estate investment.

      This would put you in charge of the full variable gross income in the future. You would, of course, be exposed to market risk and costs, but the property could remain fully managed remotely by an existing or new manager. In fact, this could even mean you’ll be earning marginally more than the agreed NET income, especially as rental income increases.

      But as we’ve said, this is a hypothetical situation; we currently have 19 successful operational properties, and our partner developer has in excess of £29 million of clean and clear assets with no debt. So, everything is in very good shape, and while it’s good to consider the worst-case scenario, it’s highly unlikely to come about.

      I hope this helps.

  • Default Avatar

    Clem - 22/02/2017

    Can I retain ownership throughout the lease term or am I obliged to surrender the lease if the development is sold or otherwise transferred?

    Reply
    • Emerging Property Avatar

      from Emerging Property - 12/06/2017

      Moderator

      Thanks for that, Clem – your leasehold will be registered in your name at the Land Registry. So regardless of what happens to the development in the future, your unit will remain your property.

  • Default Avatar

    Rob Rigby - 21/02/2017

    what are the fees for resale . what is timescale for purchase

    Reply
    • Emerging Property Avatar

      from Emerging Property - 13/06/2017

      Moderator

      Thanks for getting in touch Rob. For a 5% commission, we will oversee resale on your behalf and professionally market your unit to our large international database of active investors.

      Buyers are always interested in operational properties that will provide them with immediate high NET yields. We are normally able to sell resale units within 4-6 weeks, and have always managed to achieve at least 10% capital growth for our buyers.

  • Default Avatar

    Jesse Patel - 18/02/2017

    How do I arrange a site visit before buying, Also what happens if the student does not look after the property or does not pay rent.

    Reply
    • Emerging Property Avatar

      from Emerging Property - 13/06/2017

      Moderator

      Hi Jesse, thanks for your message. You can contact us directly if you want to arrange a site visit – one of our property consultants will organise this, alongside management personnel in the case of operational properties.

      All our student properties benefit from professional onsite management – this includes regular room inspections, typically once per month. So, if a student isn’t looking after the property, the management team find out very quickly. They will typically give them notice to clean their unit or receive a fine. This normally corrects the behaviour. In terms of any damage the student may cause, if it’s not fair wear and tear then the student is charged for the repair or replacement.

      Our developer is incentivised to ensure high standards of preventative and reactive maintenance because, remember, you have zero costs for 10 years, so any damage will not be your responsibility.

      If a student refuses to pay rent, they will be chased up by the onsite management team. In the worst-case scenario that they are asked to leave the property, a new tenant will be found quickly and your income will not be affected.

      Again, you receive your fixed income regardless. Please let me know if you want to speak to a property consultant to arrange a site visit.

  • Default Avatar

    Ibukun Ajayi - 18/02/2017

    As a potential investor, what percentage of the property value is required as a deposit towards buying one of the properties are offering ?

    Reply
    • Emerging Property Avatar

      from Emerging Property - 13/06/2017

      Moderator

      Hi Ibukun, thanks for your question – there is a £5,000 reservation fee on all our property investments. This is usually paid alongside the fixed legal fee, which varies from property to property, but is rarely more than £1,000.

  • Default Avatar

    Andrew Hutchins - 10/02/2017

    How much ground rent/maintenance per year is charged on average…does this go up with inflation ?

    Reply
    • Emerging Property Avatar

      from Emerging Property - 10/02/2017

      Moderator

      Good afternoon Andrew, thanks for getting in touch – our property investors have zero costs throughout the 10-year fixed income period. This means no yearly ground rent, no maintenance fees and no service charge. You will also not be charged for furniture replacement, repairs or management costs – it does exactly what it says on the tin, what you read in our Investor Reports is what you get. I have passed your email address on to one of our senior sales consultants who will be in contact to explain this in more detail.

  • Default Avatar

    Sue Wright - 06/02/2017

    Hi, I’m interested in purchasing a property in Loughborough, please can you let me have relevant details. Thank you

    Reply
    • Emerging Property Avatar

      from Emerging Property - 07/02/2017

      Moderator

      Thanks for getting in contact Sue – we have two large Purpose Built Student Accommodation developments in Loughborough, as well as many others in undersupplied university cities across the UK. We regularly have resale opportunities that provide high NET yields and long fixed income periods. You can also see evidence of their performance levels and income history. I have passed your email address to one of our senior consultants who will be in touch soon.

  • Default Avatar

    George Woods - 20/01/2017

    any current investors from New Zealand?

    Reply
    • Emerging Property Avatar

      from Emerging Property - 24/01/2017

      Moderator

      Yes George, we have clients in New Zealand and 70 other countries around the world – since our properties are fully managed, they are perfect for remote ownership. All aspects of the purchase and legal title are identical for overseas buyers and UK residents – tax will be based on New Zealand regulations. One of our senior consultants will be in touch soon to answer your questions in more detail.

  • Default Avatar

    allan sanders - 09/01/2017

    do you have a uk telephone number?

    Reply
    • Emerging Property Avatar

      from Emerging Property - 24/01/2017

      Moderator

      Hi Allan, you can call our UK office on +44 203 287 8727. I have also passed your email address to one of our senior property consultants, who will be in contact soon.

  • Default Avatar

    stephen - 18/12/2016

    Thank you. One area I would like to know about the property is completion date. Have the property been built or off plan projects. If off plan, when will it be completed? do I get profit during the building stage or after completion of construction work. Kindly clarify me on these points. Thank you again.

    Reply
    • Emerging Property Avatar

      from Emerging Property - 24/01/2017

      Moderator

      Thanks for getting in touch, Stephen – we have both off-plan developments and fully operational properties, with all providing the option for immediate income. In the Investor Report for each new build property, you will receive comprehensive details of the construction timeline and operational date – your payments are staggered across key stages of construction and only processed upon architectural sign-off. One of our senior consultants will be in touch soon to answer your questions in more detail.

  • Default Avatar

    Michael Brown - 17/12/2016

    Is it possible to purchase these properties via a Ltd Company? What is the average fees for the purchase of a property?

    Reply
    • Emerging Property Avatar

      from Emerging Property - 24/01/2017

      Moderator

      That’s a good question Michael – yes you can purchase one of our property investments through a limited company, and this a common approach for many of our clients. Beyond the property price, the only additional money you will be charged by us is a one-off legal fee, which is fixed from the outset but varies from project to project and is specified in each Investor Report. One of our senior consultants will be in touch soon to explain this in more detail.

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