Considering student property as an investment target from every angle

Student property in the UK is now considered to be one of the most profitable and promising investments. British universities are very popular among domestic and abroad students, so the studios and apartments for student audience are in steady demand and the price of entry into the market, compared with other types of real estate is not that large, and is basically accessible to many investors, a potential investor may even take advantage of mortgages. To evaluate the profitability of investments conducting a thorough analysis of its maintenance and acquisition costs is essential.

An in-depth look at additional expenses

When buying any real estate you simply cannot do without additional costs, and student property UK is no exception. Firstly, it is necessary to spend a certain of money when associated with the acquisition. In the UK, there are tax breaks on the purchase of real estate (stamp duty); if the purchase price is less than £125,000, you do not need to cover this tax, and the student’s property, as a rule, fits under the specified range, so the tax is not necessarily paid. However, if you acquire expensive housing or, let’s say, several units, stamp duty rate can reach up to 15%.

And in any case, you will have to pay for legal services of conveyancing solicitors. Sometimes they are included in the cost of housing, but more frequently it is not; in such a case you should take into account the sum ranging from £500 to £1,000, plus possible additional costs for the preparation of documents.

Additional charges follow at the stage once property becomes yours. In the UK, there is no single tax on real estate, but you have to pay a council tax, which is designed to finance police, government agencies, and servicing companies. The amount of the loan depends on the region and ranges from £200 to £2,500 pounds per year. Also, income from renting the property is subjected to income tax (personal Allowance), however, if the income is less than £10,000, the tax is not levied. Though, if the sum is greater, then have to pay 20% on income up to £32.010 annually, and up to 40 – 45% in case of higher amount of income. If the planned profit is put higher than £32.010 pounds per year, it is better to register a property to a company, and if your incomes account for £10,000, it is still important to declare and register it with the tax authorities as a non-resident, otherwise tax authorities will automatically remove the 20%. At the same time, if the property is way more expensive and costs more than £2ml., you will not be able to escape high taxes, as you will have to pay an annual tax (Annual Residential Property Tax, ARPT) in size from £15,000 to £140,000, as well as a capital gains tax at the rate of 28%. In addition, student property is typically registered as leasehold, meaning you have to pay the land rent (ground rent) – the payment of £100 – 500 pounds a year.