Student Property Investment Still Hot, Even in 2021? Lets Find Out!
Buy-to-let investors have long sought student property investment, in places where student numbers are high. Students tend to flock to these same areas year-on-year, assuring a high number of enquiries for the property when placed on the market.
As an investor, it’s likely you’ve been offered student accommodation at some point. With guaranteed interest and attractive rental yields, it’s certainly a venture worth considering. However, as with any property investment, there are potential hazards to look out for.
Student Property Investment
In the UK, there are around 2.3 million students at university during term time. And as we all know, many of them are relaxed over their accommodation as long as campus buildings, basic amenities, nightlife hotspots and transport links are close by.
Because of this, even relatively inexpensive housing will attract high tenant numbers and produce impressive yields if in prime areas. Furthermore, unlike some other sectors of the property market, student accommodation will always remain in demand.
The bad reputation of British students can tend to put some prospective buyers off. In some cases, with students left to their own devices, properties can fall into disrepair and collecting rent can even be tricky at times.
However, the facts don’t back up this misguided preconception, proven by the substantial and long-standing profits of student landlords across the UK.
For those still concerned, the most effective way to alleviate these fears is by investing in purpose-built student accommodation (PBSA) through a regulated estate agent. This means there’s no more worry over a faulty boiler, leaking taps or broken microwave – everything is managed on your behalf.
A study completed last year by estate agents Savills’ shows that the market witnessed activity worth £5.6 billion in 2015.
This is largely because students are becoming more attracted to the secure yet accessible nature of PBSA buildings, incorporating private bathrooms, large communal areas, high-speed broadband and even gyms in some cases.
Prime Locations for Student Property Investment
As with all property investments, location is key. Look for universities with large student populations and which areas they tend to congregate in. As an example, Leeds University students tend to flock towards the Woodhouse district with its fantastic transport links, local amenities and array of drinking establishments.
Another tip is to look for universities with a high ratio of international students; statistically, they’re more likely to be wealthy and move into PBSA property. The weaker pound post-Brexit is expected to attract more foreign students to the UK in 2017.
One good establishment in this regard is Edinburgh University which comprises of around 10,000 foreign students. Consider investing in the purpose-built Braefoot House, based in the Newington area, which is located only a short distance from the science campus.
Many property investors are turning to managed student halls due to the hands-off nature and low cash requirements. With high rental yields of around 7%-10%, sometimes guaranteed up to five years, along with a substantial demand year-on-year, it’s worth looking into for budding investors.
With any outlay of this size, you should evaluate the long-term benefits and plan an effective exit strategy. If looking at purpose-built student accommodation, arrange a meeting with the property developers before committing to an investment.
Student property investment in the UK, in 2021
U.K. student accommodation providers have been hit particularly hard by the number of international students who chose not to come for the 2020/2021 academic year due to travel restrictions and concerns about the pandemic. The U.K. is one of the largest markets in the world for international students, who make up 20% of the total student population, 54% of full-time taught postgraduates, and 49% of full-time research degree students.
Some smaller, independent student accommodation providers in the U.K. could go bust in 2021 as a consequence of the COVID-19 pandemic, offering opportunities to some larger players, according to industry experts.
The sector has had a turbulent year following the imposition of a national lockdown in March that closed universities and prompted thousands of students to vacate their accommodation.
If distressed opportunities do arise, there should be more than enough appetite in the market. Investor interest in U.K. student accommodation has remained strong in the face of the pandemic.
If you’re interested in investing in student accommodation, get in touch with us today.
We have lots of information on different areas where investment in student properties is producing great profits, including why the University of Huddersfield is top of the class.