When it comes to residential asset classes, student housing is performing incredibly well and this is highlighted by the increase in purpose built accommodation.
The demand for student housing has increased in recent years and this is down to the record number of applications being made to universities along with the increase in international students and this has resulted in an increase of purpose-built student property.
In 2015, investors spent £4.2bn on student property which is a considerable rise from the figures of the previous year of £2.45bn. Therefore, the belief is that student housing is likely to continue to perform well and landlords could see returns of 8-10% depending on where their property is located.
Following the decision to leave the EU, there is a concern that international student numbers could drop, particularly in London but is it still worth investing in student housing?
Research has found that it is still worth investing in student property as the sector is expected to continue to grow during the next ten years with international students from beyond the EU still growing in numbers. So what makes investing in student housing an attractive prospect?
High rates of occupancy
UK universities accepted record numbers of students in 2015 and more and more of them are choosing to live away from home and this means an increase in demand. However, supply of purpose built accommodation is often low, particularly in dense cities such as London and Manchester and this means investors are snapping up properties to let to multiple students.
Low supply, high demand
Students often find that they have to stay in purpose build accommodation located on campus during the first year, but following that they have the choice of staying elsewhere. This means that they can consider privately owned properties. Landlords then have the option of purchasing Houses in Multiple Occupation that enables them to let rooms individually or to a group of students.
It is an asset that works well
Education is important and so it is in demand and this is why student property investment is worthwhile. It was one of the sectors that managed to cope with the recession as students still went to university. As a landlord, if the property is kept in good condition, it will be desirable to students and so they will feel like it is a worthy option. They will also want to stay for the remainder of their studies as it will relieve them of the stress of moving as well as the cost and hassle of finding a new place to live. As a landlord, it will offer peace of mind knowing that the property is occupied and this means that money is saved on advertising the property and carrying out tenancy checks and screening.
Investment doesn’t have to be centrally located
It is natural for students to want to be located near to their campus but it is also possible to invest in property that has excellent transport links to campus. It is possible to purchase a property that is located further out but this can improve returns.
Long term investment opportunities
Student property is an ideal choice when it comes to property investment. Regular tenancies for long periods are also an attractive prospect but the lack of opportunity to make a quick sale means that this is an investment that needs to stand the test of time.