If you are considering looking into property as an investment, then one potential option that will come up is student property. There is both pros and cons to owning property that is targeted at students. Before making the decision, you’ll need to consider whether it’s the right investment for you. So, in this mini guide, we’ve consolidated all the potential information you might need when deciding whether to invest in student property.
What is student accommodation investment?
Student accommodation or property investment typically involves buying a house or flat and renting it out to multiple student occupants. Student property tends to be located near to the university campuses, in the city centre, or student-centric areas. In Newcastle, these areas include Jesmond, Sandyford and Heaton.
The attraction of investing in student property is that you can rent it out to multiple occupants at once. This can return a higher monthly yield and be a more lucrative investment when compared to a regular property.
A further bonus of student property investment is that it typically has a high occupancy rate, and it is easy to find new tenants. Most university campuses don’t have enough accommodation to house many students on campus, so the majority look to move into alternative housing.
Types of student accommodation to invest in
There are several different types of accommodation available for university students to live in. Typically, first year students will reside in halls of residence before moving into private student housing from the second year onwards. This is especially true for students who are moving to the area from elsewhere in the country.
When it comes to investing in student property, by far the most common type of accommodation to look at is private student housing, whether that be a flat with one or two rooms or a whole house/maisonette with multiple rooms.
Demand from overseas students
The demand for additional student property is continuing to rise, as the UK has seen an enormous increase in the number of students attending university in the past 20 years. One reason for the surge in demand is because the UK has become a popular location for overseas students to attend university.
Typically, university owned accommodation can’t house all incoming overseas students, so there has been an increased demand for private property.
Pros and cons of investing in student property
Like with any investment, there are pros and cons when compared to alternatives. Some of the main pros and cons with student property investment include the following:
Pros
- The demand for student property means that you are almost guaranteed to have tenants’ year in, year out.
- Students can bring in higher rental yields when compared to other types of renters.
- Students prefer to live in larger groups and it’s easier to rent out HMOs to students rather than others.
- Properties are often located in areas that are cheaper to buy, such as inner-city locations.
- Your property will likely appreciate in price over the years, giving you better returns if you decide to sell the property.
Cons
- The properties will likely require a higher level of maintenance and management when compared to other property investment
- Properties are often only occupied by tenants during the academic year (September – June) with many students only paying full rent between those months
- There is likely to be more chance of wear and tear in addition to damages when compared to other tenants.
- Depending on the property type, you may be required to get additional licensing.
Tips for investing in student property
- Location is everything, so be sure to choose a city with a high population of students when choosing to invest. Some of the most popular student cities include the following: Newcastle, Edinburgh, Leeds, Manchester, Liverpool, Sheffield, and Nottingham.
- Be sure to check the local demand in the area you are looking to buy in.
- Some cities have high concentrations of students living in the city centre, whereas others have inner-city suburbs that tend to be dominated by students. It’s best to check where the highest demand is before choosing a specific area to purchase a property.
- Be sure to consider what students will want in a property.
As you can imagine, there’s often a lot to consider when deciding whether to invest in student property. But there’s a reason a lot of people choose to become student landlords, and that’s because it’s a lucrative opportunity with growing demand.
