Why Liverpool Is Top For Student Housing Investment
One area of the UK’s property sector continues to boom, regardless of the uncertain economic outlook for the country.
Research by Savills shows that by the end of 2017, £5.3 billion will have gone into student accommodation investment. Brexit doesn’t appear to have slowed down investment in this sector, and there has also been a 2.2% rise in applications from overseas students since 2016.
Student accommodation continues to attract much interest from investors, as demand is exceeding supply in most regions. Excellent yields can be made by discerning investors, and the north west of England is proving one of the most exciting areas for opportunities in the UK.
Northern Appetite For Student Accommodation
The north west of the country as a whole is seeing demand increase for student housing, with Mistoria Group demonstrating that the region was up by 38% year-on-year. And Liverpool is one of the most important areas for investment.
There is a real shortage of student accommodation in a city that boasts many higher education offerings. This has led to a situation where there are excellent yields for investors in shared student accommodation. Areas that are particularly ripe for investment in Liverpool include Wavertree, Toxteth, Kensington and Kensington Fields.
Houses Of Multiple Occupation
It’s possible for savvy investors to buy a high-quality, three-bedroom House of Multiple Occupation (HMO) from around £120,000. Each room can be rented out for an average of £85/week, including bills. Extras like en-suite bathrooms can push the rent up to around £110/week. The ROI (return on investment) is attractive, at around 13%. This splits into 8% cash rental and 5% capital growth.
Experts advise investment in HMOs rather than ‘student pods’ (individual rooms or small pods). These are at a disadvantage when it comes to resale value and potential for capital growth, and are far riskier than traditional larger, shared properties. The investor pool for single pods is much smaller than for HMOs, flats and other types of student accommodation.
Other Areas For Investment
The Northern Powerhouse is undoubtedly a strongly attractive region for investment in student accommodation. There are many purpose built student accommodation properties (PBSA) in development, as well as the potential of traditional housing stock, giving lots of choice and opportunity.
Research from Simple Landlord Insurance found that the very top university for investors is also up north – in Scotland. Prince William’s Alma Mater, the University of St Andrews offers yields of up to 12%.
At the other end of the scale, the lowest yields come from Oxford University, averaging at just 3.3%. For example, a property in the main student district costing an average amount of £720,000 only brings in about £2,000 in rent.