Student property can offer a good opportunity for the investor, thanks to the higher-than-average yields that student accommodation can offer. However, here are some things to remember when looking for the perfect student investment property:
The student market is ever changing. Although student numbers are still buoyant it’s unlikely they will ever rise as fast as they did in the 90s and 2000s – and almost certain they will fall in future. In future there could be fewer students looking for accommodation – although they’ll be in a position to pay more for it using loans, part time employment and more parental support.
Plan well ahead. In many places, students start their search for their perfect student house as far as 8-10 months before the start of the next academic year. A new student property that comes to the market in the autumn, assuming it’s in a good location, should get lots of interest.
Choose your town or city with care. Some towns have a chronic shortage of student accommodation, while in others there’s an oversupply. Bear in mind that just because a town or city has a renowned university and/or one which is heavily oversubscribed it does not mean there is a shortage of student property – and vice versa.
Know the best locations. At the moment the trend is for students to move away from their traditional student suburbs into more central city living locations which are handier for college and social facilities. This can be both a problem and an opportunity for investors – student property in traditional suburbs can be hard to fill, while there can be a shortage of student property in these newly popular locations.
Also: Check if a university might be planning to move its campus in future. A number of student accommodation areas have been impacted by this in recent years.
Consider the local universities’ admissions numbers and accommodation policies. Since the advent of fees some universities are finding it hard to attract students, while others still receive more applications than they can fill.
Check what the local universities’ accommodation policies are – many universities guarantee to accommodate all first year students in university accommodation and in fact positively encourage them to do so.
Consider the competition from PBSA. Purpose built student accommodation blocks from commercial developers have impacted the market in most large student cities in recent years. so it’s important to check what further new developments may be in the pipeline in your chosen area and which may affect it further.
Note that this doesn’t mean there aren’t any opportunities for private landlords. PBSA can be very expensive and many surveys on the subject report that a majority of students prefer to live independently, with fewer rules and regulations, with friends in shared accommodation.
Quality is increasingly important. Also, be aware that improving a property can transform its lettability and yields. Modern day students look for a similar standard of facilities to the professionals letting market. In most cases they (or their parents) will pay extra for properties with good facilities and, conversely, property with poor facilities may be hard to let at any price.
When choosing a property look for spacious study bedrooms, ample bathroom facilities (or even en suite rooms) a kitchen with ample cooking and laundry facilities, a pleasant communal area, fast broadband access and high standards of security.
Investing in student sub-markets can offer fewer management problems and higher yields. For example, overseas students often prefer to live with their fellow nationals in secure locations where support is available.
Postgraduate students often prefer to live well away from traditional student locations.
Although relatively few students are couples/have children there is a severe shortage of this type of accommodation in most student cities, meaning it is in very high demand.
Lastly: If you’re thinking of investing in student accommodation always take expert advice, including advice on local supply and demand from letting agents and university accommodation offices. They’ll usually be glad to tell you if there is a shortage of student property or a surplus, what and where students are looking to rent, and how much rent they expect to pay.