More landlords moving towards student accommodation to diversify

Landlords are increasingly looking for ways to diversify their portfolios following tax changes, with brokers receiving more enquiries about Houses in Multiple Occupation (HMO), commercial property and student accommodation. 

51% of brokers in the UK have met with landlords over the last six months, and 56% of enquiries from landlords involved an interest in diversifying.

Furthermore, 6% of brokers met with landlords interested in a move towards investing in student accommodation.         

New research from OneSavings Bank reveals that landlords are looking to diversify in the wake of numerous tax and regulation changes impacting the buy-to-let sector, and this includes a move towards commercial, semi-commercial and mixed-use property.  

Sales Director at OneSavings Bank, Adrian Moloney, said: “Landlords are on the hunt for greater yields, and, in the face of regulatory and tax changes, diversifying into commercial property or more complex residential options such as HMOs can offer this.”

One change which is impacting the sector is mortgage interest tax relief. This affects individual landlords with residential property and limits the amount of relief landlords can claim for finance costs to the basic rate of Income Tax. It is being phased in, so allows those affected more time to adjust.  

Likewise, changes introduced by the Prudential Regulation Authority are making it harder for ‘portfolio landlords’ – or landlords with four or more buy-to-let properties – to obtain a mortgage.  

Investors have also had to absorb an extra 3% surcharge on the purchase of buy-to-let properties (second homes).  

However, these findings show that landlords are looking for practical ways to invest in the buy-to-let market or continue to invest by way of diversification.  

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Property Wire