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What to look for when investing in student property

What to look for when investing in student property

​Investing in student accommodation is a tried and tested way of securing a reliable, long term income stream. Indeed, it is becoming common knowledge that some of the best yields in the business are to be found in student specific properties. It has been predicted that yields in some areas of the country such as Manchester will increase by a massive 13% over the coming years! The number of students in the UK, from both home and abroad, is growing and they need places to live.

Gone are the days when students could be housed in the most inconvenient corners of the city and the most badly maintained properties without complaint. The modern student will expect their dwelling to be well furnished but there are a few things to take into consideration to make sure you will have tenants who want to rent your property in the first place.

What should you be looking for when investing in student property? It is more important than ever to take the needs of your potential tenants into account. Rising rental costs combined with the rising costs of education ensure that young people are looking to get the most bang for their buck.

Location

When considering an investment, the location of the property is the most important consideration of all.

Which university town is a good fit for your circumstances? This fundamentally depends on how much capital you are willing to invest, but the Savills UK Student Housing Spotlight should give a good indication of which locations are on the up. The most recent 2015 version shows the following rankings:

Savills UK Student Housing Spotlight 2015
Savills UK Student Housing Spotlight 2015


The higher up the leagues a City is, the greater the demand and the stronger the need.

From the tenant’s side, a property which is within reach of the city centre and amenities will be more desirable, whether that is walking distance or via public transport. A well located dwelling will ensure you have more potential tenants.

Likewise a property in a notoriously bad area will be less appealing to potential tenants, especially to international students.

Student Population

The number of applicants for higher education in the UK has risen by 0.2% this year compared to the previous academic year. The UCAS breakdown of these numbers shows that the overall student population in the UK is in rude health.

A city with a large student population is a City with more potential tenants. For instance the various Manchester and Salford universities have almost 100,000 students between them, one of the largest student populations in Europe.

You also must consider how the student population is currently served.

There is a general lack of student accommodation across the country but does that apply to your chosen city?

Investing in a city well supplied with existing accommodation will do nothing to increase yields. Similarly, if there is a big programme of building planned in the near future, including traditional halls of residence, will this affect your future yields? The great benefit of investing in student “pods” is the consistent income rather than a future resale price as would be the case with a traditional buy-to-let flat; Do you really want to invest in a place where the market might be undercut five years down the line?

Broadband

The latest “What Students Seek” survey confirms that good broadband speed is far and away the number one concern for students when looking for accommodation and it is really no surprise.

More and more of modern life takes place online. A good internet speed is vital for work, shopping, banking, emailing, watching Netflix, ordering pizza and almost everything else. The student life is no different and a property in an area without good broadband will be less attractive to tenants.