Property investors looking for opportunities to increase their rental income in 2019 have many avenues to explore in the UK, one of the most exciting of which is student accommodation.
As a recent CBRE report showed, this sector delivered returns of 12.3 per cent during the year to September 2018, with capital values increasing by 6.5 per cent.
There are some very compelling reasons why student property could be a valuable addition to your investment portfolio in the coming year. Here are just three…
Strong yield potential
Bespoke student accommodation gives landlords the opportunity to receive regular, strong returns on their investments, seeing as many tenants are willing to pay a premium to secure high-quality housing, with desirable features and convenient access to their campus.
This is particularly true for international students, who are a valuable source of demand for landlords. Parents living overseas who are sending their children to the UK to study are often prepared to pay for assurances on safety, such as 24-hour CCTV coverage and controlled access to the building.
According to research by Knight Frank, more than half of international students would also be willing to pay a rental premium for benefits such as high-speed Wi-Fi and an on-site gym.
The enduring prestige and appeal of British educational institutions means bespoke student accommodation will always attract strong demand from people attending universities and colleges up and down the country.
According to figures published by UCAS in April 2018, the proportion of English 18-year-olds applying to higher education last year reached a record high of 37.8 per cent.
Meanwhile, Brexit-related uncertainty didn’t stop the number of EU applicants rising by two per cent year-on-year to 46,040, while applications from other overseas countries increased by eight per cent to 65,440, another record.
This reliability of demand is a major factor for landlords who want to feel confident their properties will deliver consistent rental returns and a low risk of void periods.
Plenty of choice
The wide range of well-known and popular higher education institutions located all over the UK means student accommodation investors have many destinations to choose from, each offering unique characteristics and benefits.
One city that is steadily growing in prominence as a student property hotspot is Liverpool. The city has a combined student population of approximately 70,000, who are attracted by its three universities, combined with the local culture and lifestyle.
According to TotallyMoney’s Buy-to-Let Rental Yield Map for 2018-19, Liverpool is home to six postcodes that are among the top 25 buy-to-let areas for 2018, based on their attractive yields.
The north-east is another promising region, with properties in the NE1 zone offering landlords a high chance of strong tenant demand and good yields thanks to their proximity to Newcastle University and Northumbria University.
Taking these various factors into account, it’s clear that purpose-built student accommodation is set to remain an appealing option for buy-to-let property investors this year.
To find out more about this asset class and how it could deliver results for you, read the Experience Invest 2019 UK Student Accommodation Investment Guide.