Student Property – what you need to know when investing

In recent years, student housing investments have grown significantly. Driving this is the fact that student numbers are at record highs and this is causing a push in demand for rental property.

Following changes by the government, universities are now able to offer more places and this has resulted in increased competition between institutions. The number of students from Non-European Union countries has been increasing at a considerable rate and although the number of UK students has stabilised, it is likely that international student numbers will also increase.

In fact, the figures are incredible as up to 22 professionals and students competed for rooms that could be found in university towns and cities. Many landlords are unwilling to let to students and this means that only 40% of rooms in the top 25 university cities are available.

Universities used to be responsible for offering students accommodation but over the last decade the demand for accommodation has been higher than the supply and so, the private sector has been on hand to help.

Since 2011, the student accommodation class has performed better than other property assets and has continued to grow during this time

It is a resilient sector as rental incomes and values are stable or increasing, this positive growth has attracted investors to the market. It is a market that is financially lucrative for investors when managed correctly and in some places a property can be purchased in an ideal location for both professionals and students for £165,000. This is a property that has been refurbished, furnished and has tenants for the year.

Choosing to invest in a student HMO is a long-term option as there will be a constant demand for the property over the course of a year. Rental prices are higher for student property investments when compared to buy-to-let investments.

If you believe that investing in a student property is the right investment for you then the following tips will ensure you make the right choices along the way.

What you should consider

The area needs to have a university that has a good reputation and a high ranking as this will ensure that the demand for accommodation continues. Students need to be located close to the university so aim to be no more than a 30-minute walk away from the university. Carry out research on agents so that you can find one that you can work with and when the time comes to view the property ensure that you meet the agent.

Opting for a student house instead of pods will give you access to a resale market whilst they also qualify for a buy-to-let mortgage. You will also need to be clear and transparent about all costs and so, rent should include bills and unlimited broadband.

Things you shouldn’t consider

As mentioned, you should try and avoid student pods as well as off plan deals that require you to pay capital in advance as it could be several years until you take ownership of the apartment. Small rooms with very little space are a no-go and will put tenants off so don’t try to cut corners and purchase a cheap property with a low spec property. Remember that student properties are investments designed for medium to high yields as well as long term so do not consider flipping the property. Finally, do not go it alone, especially if you have no experience as this could lead to financial problems and bad decisions.