March 3rd, 2016
The rise of purpose built student accommodation and the spiralling costs of halls of residence mean a change in the status quo is likely.
Living in halls of residence at university has traditionally been something of a necessity and a rite of passage for new first year students. Halls are the place where you adjust to living on your own. They are where you are forced to branch out and meet a whole set of new people for the first time in many years.
Traditional university halls represent a good half way house between the relative safety of home and the world of bills and responsibility which makes up adult life. Suddenly there are fewer illusions and no safe retreat back to your parents at the first sign of life going a bit sideways.
However, the rise of purpose built student accommodation means that university halls may not be the default option for much longer.
The cost of living continues to increase. Tuition fees have tripled in recent years. The maintenance grant, a lifeline for students from lower-income backgrounds, has been scrapped and replaced by yet more loans. Debts of more than £50,000 will soon be the new norm for graduates.
The quality of university accommodation often fails to match up to the exorbitant price tag attached. The internet is awash with horror stories about the utter state of halls of residence up and down the country. The prefix “Her Majesty’s Prison…” would suit many of the older residences and in some cases could even be classed as a compliment. The most prominent example of this concerns the UCL students withholding hundreds of thousands of pounds in protest at massive rent increases on accommodation not fit for human habitation.
As students are asked to take on more and more debt simply to live and study at university, is it any surprise that the traditional university halls are becoming less and less attractive?
Whether it is a self-contained studio apartment in Liverpool, a more traditional student ‘pod’ in Birmingham or anything else in between, it is clear that private student accommodation is thriving.
Purpose built private student buildings are designed to perfectly meet the needs of modern students. They come with communal areas for residents to socialise and make new friends. They are in great locations close to all the shops, pubs and transport links a student needs. They provide privacy for the residents to work in. The cost of living privately for students is broadly similar to that of traditional halls of residence.
The student population of the UK currently stands at just under 2.5 million and they all need somewhere to live. The high demand and, currently, low availability combines to produce higher than average yields.
There are slightly fewer than 2.5 million students in the UK and they are being asked to pay more for the privilege of learning and living than any other generation in recent history. Top quality, properly managed student accommodation is more tempting than ever.
Investors should seriously consider taking advantage of this trend. Purpose built student accommodation is one of the strongest asset classes available as well as having a relatively low entry price point. This makes it ideal for both first time investors and more experienced buyers looking to diversify and existing portfolio.