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Student property news this week

Student property news this week

As reported recently, investment into student property and Purpose Built Student Accommodation (PBSA) has been flooding in since the beginning of the year and there is a strong expectation that it isn’t going to slow down as we head towards the end of the year.

With the majority of new higher education students now settled into their accommodation thoughts are beginning to turn to the New Year and fresh opportunities as developers and universities unveil plans for new projects.

There was some unwelcome news, however, earlier last week as it was reported by Sky News that the universities minister Jo Johnson has had to intervene after it became apparent that some universities had drop-out rates of up to 67%.

Jo Johnson said the institutions urgently need to review the “value for money” of some courses after research by Sky News found withdrawal rates of up to two thirds. Dropout rates per course are not published by universities, but according to data obtained under the Freedom of Information Act.

With tuition fees tipping over the £9,000 per year mark, many were left shocked by the research and urged universities to take action. Students who drop out of their courses are still liable for some fees and ministers have demanded action.

Universities and representatives were quick to point out that the vast majority of institutions provide an excellent service, with student satisfaction rates very high.

Research from LandlordNews has found that the North West in particular has been supporting the PBSA sector, with overseas landlords apparently ‘piling into the market’. Research from Savills shows that the proportion of international investment flowing into the UK market has almost doubled in the past two years, with £1.2 billion coming from Singapore alone in 2016.

It also reports that 25,000 new student units have now been completed this year, with a further 14,000 under construction in preparation for next year. Some companies selling student investments have seen demand soar across the region with one reporting a 35% increase in demand in Liverpool alone.

Further to this, Glide Utilities, the student utilities and service provider, have reported that student rents have remained stable for the second year running. Average rents, it said, were between £100-£119 per week across the UK, unchanged from 2016.

It also says that, other than tuition fees, rent remains the biggest outlay for students whilst they study. The majority of rents range between £80 and £139 per week, with London students paying over £200 in some areas.

Just under half of the students responding to the survey said that their accommodation represented good value for money, an increase on previous data.

All of this research points to a successful future for student landlords with universities under the spotlight and forced to offer a better service. Investment is also still pouring in, showing that PBSA remains one of the strongest asset classes around right now, with investors from abroad especially keen. Finally, rents are steady or improving, meaning strong and steady yields for investors whilst student satisfaction is increasing.

Overall landlords can be happy with the way 2017 appears to be wrapping up.