August 16th, 2017
Classically, the summer period has been the ideal time for prospective and potential student landlords to start taking a look at new investments for the coming academic year starting in September. It has been a bumper year so far for the asset class with no signs that things are going to slow down.
With major European, US and worldwide investors and funds getting in on the act, it’s not difficult to see why Purpose-Built Student Accommodation (PBSA) is a hot topic among investors right now. Birmingham, Manchester, Edinburgh and Glasgow have all seen significant investment in the past year.
As we take a number of enquiries every day there are certain questions which arise more frequently than the rest, so in the interest of best advising our readers we’ll cover the most frequently asked questions we receive here.
Q. What is Purpose-Built Student Accommodation?
PBSA is property that has either been built from scratch with the sole purpose of student accommodation or property that has been refurbished specifically for student tenants.
Typically the projects are undertaken within easy travelling distance of major universities and there is a trend at the moment for large-scale developments in major cities and towns across the UK
Q. How is Brexit likely to affect demand for student property?
Up to now it has been unclear, although we have heard a lot in the news about European student numbers dropping significantly.
As it stands this is purely speculation, and the figures that have been released by the Universities and Colleges Admissions Service (UCAS) have indicated only a small reduction in European numbers.
The number of English and UK student is steady despite negative coverage, and there is no indication at the moment that student numbers on the whole are likely to be significantly affected by Brexit.
Q. What is the cost of buying student accommodation?
It really depends on what you’re looking for but you can expect student investment to be a significantly lower initial outlay than traditional residential property or commercial property as the majority of new builds or resales are smaller, for obvious reasons.
Rental yields on student apartments tend to be strong, and as you’re only purchasing a single room the initial cost is much lower. There really isn’t a typical price band as location, amenities and proximity to city or town centres will all affect the price as they would with domestic property.
You might expect to pay anywhere between £30,000 to £100,000 depending on what you’re looking for and where it is.
Q. I’ve heard that selling student property is difficult
The resale market for student property isn’t in the same bracket as residential property as it’s a more niche market – but that’s not to say it is difficult.
In years gone by, the niche nature of the market it made it occasionally difficult to sell an investment should you need to free up capital, but the recent growth in popularity of the market means that many investors are actively looking for resale properties.
The resale market is very healthy and should not put off prospective investors.
Q. What about management?
There is a misconception that managing student property can be stressful and time consuming due to the nature of rowdy tenants.
In recent years there has been a marked trend in students spending more time in their accommodation studying rather than partying all night and trashing their property, thanks mainly to the increase in tuition fees which has made students poorer.
Besides the fact that many students leave their accommodation in exactly the condition they found it, you’ll find the vast majority of investments come with readymade management companies with years of experience in dealing with student tenants. They’ll often deal with rent collection, maintained and other issues involved.
We do hope that this proves useful to those visiting the site with investment in mind, but be conscious that the best way to answer your enquiries would be to get in touch.