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Why invest in student accommodation investment UK

by Jonathan Adams
student accommodation

If you are an active property investor, having explored all the property investment subsectors across the UK, then you may be already aware of student accommodation investment UK. You may already know that you can reap rich rewards by investing in this important segment of the property sector. But, if you are not aware of the potential of student accommodation investment UK, then now may be the time to consider that since it is one of the most attractive ways to ensure a good income over the long term.

With the rising commercialisation of the student living sector, an ever-growing student accommodation investment UK opportunity has opened up to investors. Student accommodation investment is fast becoming a key part of the property sector. As there is a shortage of new build homes and affordability remains a major factor, students are looking for alternatives to traditional living. Traditional student living options are no more sufficient for students as they usually include standard accommodation only, lacking in student-specific facilities. Moreover, they may be located away from the universities and places of learning, resulting in high transportation costs for the students. Students want cheap alternatives along with other features such as a location near the university. That is why organised student living has become so much popular over the past few years. The student living properties are usually located at quiet places around the universities which saves them on time and finances.

As the number of student enrolling in higher education at universities across the country continues to rise each year, the potential for student accommodation investment UK keeps on growing. Since universities have too many students to house on campus, there is a huge market for alternative student accommodation. These include students from within the UK, as well as those from the overseas. Since the UK has some of the best universities in the world, it attracts students from across the world.

Student living investment

Student living is one of the most attractive types of accommodation to invest in as it has many advantages over the traditional types of residential investment. Student accommodation typically has a high occupancy rate, it is easy to find new tenants and there is an almost guaranteed source of income. The rental incomes achieved out of a typical student accommodation investment UK is also higher than that of other residential investments. This means the mortgage can be paid off a lot faster.

Rise in the number of overseas students

The number of overseas students moving to UK universities to take advantage of quality education and the favourable exchange rate is expected to rise further.

According to research from Universities UK International, 91% of international higher education students across all levels were satisfied with their university experience in the UK, so it comes to no surprise that the UK has experienced a 2.2% rise in applications from overseas students outside of the EU since 2016.

According to UCAS figures, EU students represent only 6% of all full-time students in the UK, and therefore even in case of a harsh Brexit, there would still be a stable demand from UK students and other internationals limiting the impact on student numbers.

Student accommodation types

Student accommodation can include any type of property including houses, flats etc. There are usually multiple tenants in single houses. Moreover, the rental income out of student properties is higher than that of other residential properties as rents are typically charged on a per student basis which gives a much higher rental yield per property than a property occupied by a single tenant or family. It is also worth considering that rents may vary based on the distance between the location of the property and the university. A house near a university will yield higher rents than a house at a farther location. Ideally, the house should be within walking distance of the university but if this is not so, then there should be easy access to public transport as well as the local commercial centres.

Flats or apartments

Every city has its student-majority locations. Buying a flat or apartment up for sale near to such an area may be a good choice for student accommodation investment UK. If it is a Purpose-Built Student Accommodation, then it is even more easy as these student-exclusive developments are fully managed and do not require the landlord’s active involvement.

Shared houses or HMOs

Shared houses or HMOs (Houses of Multiple Occupation) are popular among student landlords as they allow for maximum yield per house. This type of student accommodation includes separate bedrooms along with a few shared areas. These houses allow investors to spread risk and make it easy to manage the property by having multiple tenants under one roof.

Best locations for student property

Although London is the obvious choice for student accommodation investment UK, it is also the most expensive in terms of investment. Therefore, picking the right location is the key to a successful student accommodation investment UK.

According to a report by real estate specialists Knight Frank, London will remain a top student property investment opportunity due to limited availability, but it also put Brighton, Durham, Edinburgh, Kingston and Manchester at the top. The university towns and cities are a good choice for student accommodation investment UK as they have a large student population.

Knight Frank had predicted that applications to the top universities (those in the Russell Group and the 1994 Group) will remain strong, while those at the bottom of the league tables will struggle.

Student property landlords insurance

Landlords insurance is needed to protect the investment as it covers a range of damages. It may also cover lost rental payments if the property becomes uninhabitable due to an accident covered under the insurance plan. The cover will also help find alternative accommodation for tenants affected by the accidental damage while the property is being repaired.

With the number of students on the rise, there is high potential demand for student living properties. The rise in student accommodation investment UK highlights the gap between demand and supply of student living properties.

However, it is crucial to explore the student living market before proceeding to ensure that the investment targets the right property at the right location. The investment should appeal to the student population through the right implementation of the key factors.

This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

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