The REIT credited the decline in the valuation of its student properties to the abolition of Multiple Dwellings Relief (MDR)
Student housing provider Unite Group took a hit to its valuations at the beginning of the year due to measures announced in the Spring Budget but managed to recoup the loss due to increasing rents.
In a trading update today, the REIT credited the decline in the valuation of its student properties to the abolition of Multiple Dwellings Relief (MDR).
MDR was a cut on stamp duty when buying multiple dwellings for less than £250,000, which Unite said “benefitted a number of our properties”.
This hit reduced valuations in its UK-wide portfolio by 2%, compared to rent rises of 1.7%.
Nevertheless, in its joint fund with GIC in London, the abolition of MDR was much smaller, only causing a 0.3% decline in valuations for its properties.
In total, Unite said it expected the abolition of MDR to cause the value of their portfolio to decline by nearly £70m (1.3%) in the first half of 2024.
Apart from this, Liberum analyst Bjorn Zietsman noted that property valuations had been “broadly stable” for the group throughout the month.
A total of 86% of beds for next year’s academic year have been sold so far, compared to 90% for the current year, which Zietsman noted left the group confident that it could deliver 6% rental growth next year.
The group also said today that it had gained planning approval for 1,450 new beds in London and Bristol.
Nonetheless, the analyst argued that competitor Empiric Student Property was a “cheaper entry point”.
He added: Both firms offer similar growth profiles (ESP has guided for rental growth more than 6%) and dividend yields (UTG offers a 4% dividend yield vs. ESP’s 4.4%).
