November 9th, 2016
Student accommodation is an incredibly popular asset class among all types of investors – students always need housing. Students are, however, becoming increasingly savvy and landlords are required to ensure that their properties are of the high quality students now demand. Here we discuss what makes a good student property investment.
Choose location wisely
Location is always a key consideration when investing in property. With student numbers increasing all the time, opportunities to invest are now appearing in previously overlooked areas. This can present unique and profitable opportunities for a landlord ahead of the curve. For students, proximity to university facilities is paramount so there are particular locations that students will want to live in. This can drive the value of the properties up over the short and long term.
The key feature of an ideal student property investment is proximity to university facilities. Failing that, access to good transportation routes is vital. Proximity to nightlife and amenities is also key to a good student experience. City and town centre locations are ideal for ensuring good tenancy rates and have students queuing to get on to a waiting list.
Revise your expectations
If it is the case that an area is busy with student property, you may have to revise your own expectations of income and accept a lower rental yield. Although landlords may be tempted to raise the rent to increase the yield, no-one is more concerned about value for money than students and you may forfeit tenants. To combat that, rather than looking at one property, landlords could think about building a portfolio of at least three or four.
A good amount of regeneration in a previously underdeveloped locale is often a good indicator that an area will soon see increasing rental yields. Bolton, Greater Manchester is a good example of an area which had previously been considered unsuitable for student investment but, thanks to rising student numbers, is now crying out for quality accommodation.
Less isn’t more
Building a portfolio of multiple apartments or houses will not only increase your overall rental yield, you will also spread your risk and ensure that considerations like void periods can be managed more easily. However, going from one or two properties to three or four requires specialist finance and the support of professionals.
Due to the fact student properties often require far less capital investment than traditional residential investments, this can often prove a popular investment strategy for investors with risk management at the forefront of their thinking.
The stereotypical grimy student digs are now a thing of the past, with overseas students in particular paying a premium to attend university in the UK and expecting good accommodation. Students want quality and are prepared to pay for it. A recent report found that 60% ranked having double beds in bedrooms as ‘important’, while 40% considered en-suite bedrooms just as important.
Amenities are key features in today’s market and seemingly small things such as bed size and broadband speeds count for a lot for students who are now more able than ever to get more for their money. It’s important to consider things that students find important. A gym, for example, could be an important feature that those of us who aren’t students may not have considered.
Student property will continue to be a popular and well-performing asset class but as the quantity of available property shrinks, landlords will have to consider more carefully how they make them work in their portfolio.
Interested in investing in a student apartment in a buy-to-let hotspot? Have a look at our available investment opportunities!