Student Property Investment
Find The Perfect Student Investment Property With Our Help
Key Highlights of Student Property Investment
- Fixed rent for 3 to 5 years
- High number of tenants, low supply of student housing
- Fully managed investments
- No Stamp Duty Land Tax
- Affordable pricing
Student accommodation has become a staple in the UK property market. Given the world class educational institutions situated in the UK, the demand for quality accommodation continues to increase, but there is a fundamental under-supply of this now relatively mature asset class.
This creates a high-potential investment opportunity. It is our role to help both first-time and experienced investors to buy student accommodation,
Why Invest In Student Property?
For savvy investors that are looking to acquire income-generating assets underpinned by a stable supply of tenants, student accommodation can be a great choice. The fully managed structure, lack of stamp duty land tax and fixed rental assurances offered by property developers makes the investment proposition incredibly attractive for those looking at a hands-off strategy.
As a result, most new-build student developments completely sell out during the construction period.
With the entry level of student accommodation typically being below £125,000, it means in most cases investors do not have to pay Stamp Duty Land Tax.
Student accommodation developments are very popular and, as mentioned, they typically sell out in advance of completion. The main reason is because developers offer long term fixed rental periods, which gives buyers certainty that cash flow will be both secure and lucrative. In some cases, investors can earn up to 8-10% as a net yield for periods up to 5 years. Investors can forecast exactly what their return will be during this period and they will have it paid directly into their nominated bank account, making a passive and profitable return.
Student property developers will normally appoint a dedicated student accommodation management company to effectively run the entire site. This includes the sales process of letting the properties, managing the entire tenant lifecycle and maintaining both the apartments and communal areas of the building so there will be no time-consuming phone calls or headaches for the investor.
You will find that in most university cities across the UK there is a critical shortage of student accommodation, this is driven by 4 of the world’s top 10 educational institutions being based in the UK (Cushman & Wakefield). Many universities have just a couple of thousand dedicated halls of residence rooms, with the remaining students having to go into the residential market, mostly house-shares. However, modern students, often from overseas, want secure, high-quality accommodation which is convenient in terms of location and the inclusive rental package. This is exactly what dedicated student developments offer.
Prime locations, social areas, meeting rooms, gyms, cinema rooms, rooftop terraces, cafes, bars and often a dedicated social program mean that many of these student developments provide a luxury living experience. With parents regularly being a big part of the decision-making process (and often paying for it) features such as onsite 24/7 security, approachable site management teams, secure key card systems and an efficient maintenance service means the parents favour these dedicated student projects. From an investor’s perspective, having a quality product in comparison to market alternatives will bring in the rental income and enable a higher rental price in the long term.
Where To Buy Student Accommodation?
When assessing locations to buy student accommodation it’s important to take the view of a prospective tenant. As long as the city itself has significant student numbers, proven demand and high student satisfaction rates it is likely the long term prospects will be promising.
Nonetheless, keep in mind that it’s just as important to consider the specific development in terms of its facilities, pricing and competition in the local area.
Birmingham is home to five universities. The most popular are the University of Birmingham, Birmingham City University, and Aston University. Between the three there are over 75,000 enrolled students - meaning the city represents one of the UK's major higher education hubs.
There are four universities in Leeds, with over 65,000 students between them. The biggest, The University of Leeds, is part of the Russell Group - a collection of universities across the UK with a reputation for world-class research and education facilities.
Liverpool holds an enviable reputation as one of the UK's best student experiences. Home to two major universities, Liverpool John Moores and The University of Liverpool, there are over 55,000 students spread across the city.
Home to world-class research facilities, two famous universities, a long history of innovation, and over 70,000 students, Manchester is truly one of the stars of the UK's higher education system. Both domestic and international students head to Manchester for its stellar reputation as a place to both study and live.
With over 60,000 student split between The University of Sheffield and Sheffield Hallam University, it's fair to say the city of Sheffield is brimming with student life. This is another of the UK's most popular higher education choices, owing to a fantastic, renowned student experience in a young, fun and creative city.
Expert Industry Analysis
The student accommodation asset class is a safe haven for institutional and retail buy-to-let investors with exceptional performance driven by a fundamental undersupply and quality service/product. Check out the research which supports this assessment, from global firms considered industry experts, below:
Cushman & Wakefield – UK Student Accommodation Report 2019-20
- Demand for student accommodation continues to rise around 30% faster than the number of beds developed
- £4.5bn traded in the student accommodation market in 2019
- 659,478 beds in the UK with 1,840,000 students
- The top 5 fastest growing universities have increased full-time student numbers by 41% over 5 years
Knight Frank – UCAS 2020 Student Accommodation Survey/Student Article
- 78% of students in purpose-built student accommodation were satisfied with their accommodation
- 30% of students live in purpose-built student accommodation which has increased by 22% in the past 5 years
- In all surveyed cities, the percentage of students that were satisfied with their purpose-built student accommodation was higher compared to the private residential markets and international students were more likely to live in purpose-built developments
- Value, cleanliness, location and quality were some of the top-ranking factors affecting decisions
- Rents for purpose-built student accommodation increased by 2.36% for the 2019/20 academic year, up from 2.26% in 2018/19
JLL – UK Student Housing Report 2019
- JLL forecast a further 500,000 full time UK students by 2030
- The outlook for PBSA demand is encouraging, thanks to a combination of supportive demographic trends, strong international demand and growing pressure on housing
- Construction volumes have fallen by 25% in the last 3 years due to construction costs and development/planning factors which creates opportunity and ensures demand
- JLL expect the new student to new bed ratio to increase above 3:1, leading to a continued structural undersupply in the sector
- The government has set a target of 600,000 international students in the UK by 2030
Student Accommodation For Sale
Frequently Asked Questions
Below you can find a range of common questions from previous student property investors. If you require specific details and advice please do not hesitate to contact us today on +44(0)203 627 3987 or via [email protected]
The rental assurance offered by developers provides investors a level of security rarely seen in the residential market. They will commit to investors receiving the fixed figure irrespective of the performance of the asset, so even if the unit is unoccupied you will still receive the fixed rental income.
There will be a dedicated management company appointed who are experts in the local market and are often student property specialists. They will have a network of tenants and relationships with universities to ensure optimum performance, so your property will be in safe hands with them taking care of the entire process of lettings and management.
Not much will change, you will still have someone looking after your property, although you are free to choose another management company. Your rent will be collected on your behalf and then it will work like a normal buy-to-let property with costs to consider. In most cases, due to the premium rent charged and low pricing, the net returns are very attractive.
During the purchase stage you will have to consider legal fees but typically there is no administration, furniture pack or other charges due. Once the property is complete, you will earn your net fixed income without having to consider other costs for the duration of the rental assurance period.
This type of investment property is a cash only purchase, most high street lenders do not provide finance for such purchases with the units often being below 30m2.
On some student schemes there are payment plans provided throughout the construction period. In most cases a minimum of a 30% deposit will be due at the exchange of contracts stage.
Selling your student property is very simple, we can assist with recommended companies to market your property for sale or you can use a traditional high street agent.
The student property market is more niche compared to traditional residential property as you will be focusing on investor buyers but there tends to be significant demand for properties that perform well in terms of the net income and that have a track record of high occupancy rates and rents being achieved.
What does Nick, our Founder and Director, think of student property?
“Student accommodation investment continues to grow in popularity, we receive a steady stream of enquiries from both domestic and international prospective investors.
With a relatively soft market over the past few years due to Brexit and COVID-19, security and deploying capital into assets that provide a reliable and consistent income is paramount. Student accommodation (which we call PBSA in the industry) gives investors a long-term net yield at a rate which is typically difficult to achieve in the traditional residential market.
Add this to the fully managed structure, low-entry level prices and limited additional costs and you can see why both institutions and everyday investors turn to student property to diversify their portfolio”.
Nick Hyland, Director
Our role is to advise, educate and present the most suitable student property opportunities to investors. If you would like to discuss your options with the team you can call us on +44(0)203 627 3987, email us on [email protected] or by clicking on the button below.