- Speedy internet connection – 83%
- Inclusive bills – 74%
- Good storage – 72%
- Double beds – 61%
- Large, functional communal areas – 59%
- Close to campus – 55%
- Good transport links – 31%
- Good management – 66% of those surveyed said they had experienced problems with the way their property had been managed
Is Student Property a Good Investment?
Is Student Property a Good Investment?
According to The Guardian, 320,000 sixth-formers have applied for university places in the UK in 2022, a 4.5% increase when compared with the 306,000 applicants in 2021. The average annual rent for purpose-built student accommodation (PBSA) in the UK reached £7,374 at the beginning of 2022. This is a 4.4% increase on the year prior and 16% up on pre-Covid levels. Since 2012, average rents have increased by 61%.
This has seen the student property market soar in recent times, with the demand for student accommodation exceeding the supply, particularly in university towns or cities with large student populations. Student property can offer a potentially high rental yield as many students are willing to pay a premium for high-quality accommodation, whilst purchase prices are predominantly cheaper.
With the continual stream of students annually and the continual rise in applications and rental prices over the past couple of years, the demand for student property has increased substantially and offers an extremely strong option for property investors.
What are the Benefits of Purpose-Built Student Accommodation?
- Most have added amenities within the building to attract students into paying a higher premium. These spaces are also designed to attract overseas students providing high-quality apartments in great locations and easy access to universities.
- Applications from international students, who are more likely to live in PBSA, were 4% higher than last year in the UK.
- Most PBSA developments have building management, maintenance and security in place, allowing investors to have a more ‘hands-off’ approach, with no need to deal with day-to-day issues.
- PBSA generally has a higher retention rate than HMOs and is designed to encourage a sense of community, making tenants more likely to stay for longer if they know other people in the building..
Student Accommodation Investment:
As an international student hub, the UK offers a lucrative market for property investment, especially in the purpose-built student accommodation sector. As a result, student property investment has become an increasingly popular choice for individuals looking to diversify their property portfolio thanks to the consistently rising demand increasing the rental income on offer in this section.
Investing in student accommodation offers a range of benefits, including stable rental income that is predominantly unaffected by external economic challenges or fluctuations. Purpose-built student accommodation typically offers higher rental yields than other types of residential property, making it an attractive investment opportunity for many.
The demand for purpose-built student apartments has continued to rise in recent times, with the UK student property market expanding significantly as a result. This growth can be attributed to a number of factors, including an increase in the number of students attending UK universities, an increase in the price of university-owned housing, and a demand for modern, high-quality options for student living.
Student accommodation investment in the UK is a reliable and lucrative market, with purpose-built student accommodation providing a high-quality and convenient option for both national and international students. With the market set to continue its growth as student numbers rise, student accommodation offers an option for investors looking to diversify their property portfolio and generate stable rental income.
Student Property Statistics
- £7,374
The average annual rent for purpose-built student accommodation (PBSA) in the UK reached £7,374 at the beginning of 2022.
- 4.4%
The average annual rental increase for purpose-built student accommodation in 2022 was 4.4%.
- 2.66 million
According to the Higher Education Statistics Agency (HESA), there are 2.66 million students studying at UK higher education providers.
What do Students Want From their Student Property?
Students today are interested in higher quality living to reflect their high student fees and would also like the best from their accommodation, as well as their education. Accommodation For Students (AFS) investigated what students require in a property, the most important aspects are listed below:
What Are the Different Types of Student Property?
Student halls
Most graduates will be well-versed in the concept of student halls. This type of accommodation is provided by the university and provides students with shared spaces with separate bedrooms near the university campus.
HMOs
Houses of Multiple Occupation (HMOs) are properties that are owned privately and are usually rented to students with an offering of a private bedroom and shared communal facilities. This type of investment will typically provide a high ROI, particularly if the house is at maximum occupancy. HMOs generally come in the form of an older property that has been converted, and most of them have been used for residential purposes previously.
Purpose-Built Student Accommodation
PBSA or Purpose-Built Student Accommodation is designed, developed and invested in, with student living in mind. PBSA is rapidly rising in popularity, with the majority now providing students with their own apartments, in addition to communal spaces like gardens and gymnasiums.
Things to Consider with Purpose-Built Student Accommodation
Purpose-built student accommodation is an attractive option to potential students, with many of them charging a fixed monthly rate which includes all bills including WiFi etc. However, it is important to note that this is typically considered a long-term investment strategy and not something that will provide you with much room for capital growth should you wish to dispose of it down the line. Due to their size and the planning restrictions on these properties, investors will typically have to purchase with cash, instead of a mortgage, which may be a factor in your decision-making process.
Managing your Student Property
Managing your student property can be flexible, depending on how involved in the property management process you would like to be. If you are looking to invest in a HMO, then you could manage the property yourself, or hire a reputable company to take care of this for you. Alternatively, most purpose-built student accommodations will already have a management company in place to take care of the day-to-day letting and management for you. So you have the option of being involved in as little or as much as you’d like to be.
Student Property Investment FAQs
Is it a good idea to invest in student accommodation?
Student accommodation investment is one of the most secure investment classes available on the market. The rental yields on offer are predominantly strong, and the market is usually unaffected by any external economic or residential market fluctuations. Take the last few years for example, despite high profile issues like Brexit and the pandemic, student numbers have continued to rise, and as a result, so has the demand for private student accommodation.
Is student rental profitable? What is the yield?
Student rental can be a profitable venture, as student properties often generate higher rental yields than other types of residential property investments. Rental yields for student rental properties can vary depending on a variety of factors, such as location, property type, and local market conditions, but traditionally stand at around 6 -8%. Here at Knight Knox, we have a number of student properties offering yields as high as 8%.
Are purpose-built student accommodation projects good investments?
Purpose-built student accommodation projects are extremely good investments thanks to the increasing demand for them. As universities struggle to meet the rising demand for student housing, privately owned properties are highly sought-after, and the high-quality facilities and amenities that come with purpose-built student accommodation projects see these types of properties much more desired than traditional student houses.
Find out more about our student property investment opportunities today!
