With the current economic climate making the residential property market unpredictable, purpose-built student accommodation has become a popular choice for investors in the UK.
The UK boasts a huge student population, with 2.3 million people currently at university. Contrary to popular belief, most student apartments are actually built by the private sector rather than the universities, and so there opportunities for all different types of property investor.
Student accommodation investment is attractive to investor for many reasons. The government has been keen to encourage the construction of more student housing, and with it being classed as commercial property, it is also exempt from Stamp Duty if it falls under the £150,000 threshold.
In this type of property investment, location is not an issue for the investor. As all purpose-built accommodation comes with building managers, many of the typical buy-to-let landlord headaches are dealt with. The investor simply puts their money in and waits or the return. This gives you the flexibility to choose the area that will give you more bang for your buck, and there are five university towns and cities which rank highly as investment hotspots:
There are plans in place to increase Bradford’s student population by 30% over the next five years. This has lead the local economy to boom, but with 19,000 students in need of accommodation, the opportunities for investment are ripe.
The town of Huddersfield’s popularity has been boosted by being rated as the best in the UK for international students. This gives a good degree of certainty to future occupancy rates, as more and more students flood into the area. The current student accommodation deficit is at more than 76%, which means the town is crying out for investors.
Leicester University has recently invested £190 million in their campuses, which will increase demand within the city even further. With 6.4 students vying for each dedicated room, there is plenty of room for more investment.
Ranked as one of the Top 10 universities in the UK, Loughborough is a town with vast student appeal. The town is critically undersupplied with student accommodation despite such high demand.
Stoke-On-Trent has the remarkable accolade of being able to boast the second fastest growing economy in the UK outside of London over the last five years. With a 79% undersupply of student accommodation and a booming economy, this town is high on the list of many investors.
All of these towns have seen student rooms provide high yields of 8%-10% for some time but are critically undersupplied. The need for purpose-built student accommodation is great, and as many developments are made up of multiple units, the site purchase can be spread between several investors. With some properties costing as little as £46,000, there are some perfect opportunities available, whatever your budget.
In these times of economic uncertainty, investors need to look for solid investments. The student population of the UK is thriving but also desperately undersupplied, making investment in student accommodation a very attractive choice.