Should landlords invest near schools?
Investment in the UK:
Recently, Santander’s researchers carried out a study.
It aimed at the parents of pupils at both primary and secondary.
The study noted that these parents would pay a premium price to reside close to school.
This is especially true for their favorite, state-funded school.
However, could this be an investment opportunity for homeowners?
Is it a small move to invest close to good schools?
The team of researchers published the study in 2018.
The premium would pay about 7% in the South West.
This would amount to about £18,091.
In London, this same set of parents would willingly pay 15%.
This would be equivalent to £70,675.
For premium parents, they would pay typical premiums of 10% to stay in Wales.
These premiums would be equivalent of £15,499 for house owners.
And in Northern Ireland, they would willingly pay 5%. This was about £2,731.
A study by the Bank of Scotland showed a similar trend in Scotland.
Like the first one, this study was also published in September.
It observed that parents pay 36% as average premiums.
This is around £72,973 for property owners.
The parents pay to reside in the neighborhood of high-ranking state secondary schools.
These schools are specifically in Edinburgh, Aberdeen, and Glasgow.
It was only 22% in the previous year.
This amounted to about £41,441.
Notably, the list of these high-ranking schools was different from the previous year.
The premium was not limited to purchasing properties close to good schools.
It also extends to renting close to these schools.
This observation is evident through searches on websites of letting agents.
Tenants will have to pay a lot to stay close to a good school.
Nevertheless, the study does not concentrate on this.
Many of these websites show that investors and renters prioritize proximity to good schools.
Should homeowners consider longer tenancies?
So, this brings us to the issue of tenancies.
Without a doubt, parents gain a lot from renting.
This is because the ranking of schools can change at any time.
Therefore, buying houses in catchment areas could be risky for parents.
The schools within their areas may go down in the ranking any moment.
Resultantly, this understanding is of great advantages for landlords.
This is especially true for property owners who are parents in top-ranking schools.
They rather choose to rent properties than buy them.
Currently, there are debates on forums on this issue.
This is about wealthy parents with properties somewhere who still rent temporarily.
However, the reality is often tiresome.
People say tenants are getting unsuitable properties in an area with great schools on a short let.
For instance, a family may rent a studio flat or something similar.
But this is not common.
Lots of schools request for evidence of long-term residence.
So, taking properties on a short let may be counterproductive.
We observe that family housing is a great investment in high-demand areas.
These areas include London and other highly attractive locations.
Hence, a good tip for landlords is to invest in family housing.
At the moment, the Government is discussing related issues.
The Government wants to offer renters, especially families, greater renter security.
It will offer tenants a minimum of three-year tenancies and a six-month break clause.
The NLA does not support this proposal.
Also, it could make it hard to know renter who will move in and on quickly.
Sometimes, a family may want to deceive the local authority to enroll pupils.
This three-year tenancy will be good ground for such deceit.
However, it makes things difficult for property owners.
This is because they cannot decide the duration of the stay of the renter.
What are the choicest places for investors?
Education makes it difficult for differentiating reality from fiction.
The Good Schools Guide rightly summarises this whole point.
It says the popularity of a school is similar to the stock market.
People do not use intrinsic value for the school’s popularity.
But mob behavior and psychology determine this popularity.
However, there are certain steps you can do.
Foremost, check the performance tables of Government’s school.
Also, examine the Ofsted reports that relate to schools in the locality.
When looking for homes, get this set of information from your agents.
You may choose to overlook areas with high-ranking schools.
Consider areas with improving schools because such areas are developing too.
This is a vital tip for the house owner.
In London, lots of middle-class people move into such areas.
These people run and support these schools.
Also, they request for improved standards of education.
Wealth is linked with standards of education and health.
How can investors get the most out of their investment?
It is important to get an area that is improving.
A few investors may have concerns over reputations of a local school.
They may feel if the ranking declines, the investment may lose some values.
However, this is not true in most cases.
The parents do not often disrupt their child’s education over such things.
It is only when dramatic things happened that such may result.
Notably, the deterioration of rankings is not usually permanent.
The Local Government Association (LGA) noted deteriorating in the fight for school places.
The projections of the Department of Education back this claim.
The LGA projects a deficit of 134,000 secondary school positions.
This projection is expected to be effective by 2023/2024.
No one is forcing the homeowners to agree three to five-year tenancies.
However, landlords should consider families.
That is families staying in their rentals for a year without problems.
The landlords can offer such a longer tenancy for such a family.
This is particularly true if good schools are in the areas.
During the renewal of the agreement, the two parties can negotiate.
Landlords can rely on families as great renters.
At the end of the day, you may need help with your properties.
Call us now at Reneza.
Our seasoned real estate agents are always here to cater to your needs.
We offer customized solutions that suit your particular real estate needs.