Student property investment prospects defy north-south divide
There is no north-south divide in terms of student property ROI
Student accommodation is a booming industry and has a lot to offer to landlords. It is promising because of high demand, but new developments are also on the rise which makes for some stiff competition. However, a well-furnished property could score over a relatively new one.
According to data by Hatched, together with the expenses such as renovation costs, it would take an average of 8.5 years for landlords to recover the renovation expenses. The figures by the online estate agency are based on an average renovation cost of £77,000 which would bring the cost of investment to £233,999 and a return on investment projection of 61 per cent. Moreover, renovation costs may vary as expensive renovation is not always required. Calculations by Hatched are based on figures by the online estate agency peer to peer platform Zopa.
The figures revealed Leicester to be the hotspot in student property investment with the lowest average house prices at £156,999, while Oxford was the least popular among cities in student property with an average house investment of £670,108 meaning a yield of 3.9 per cent and an estimate that it would take 25 years to pay off the renovation costs.
However, there is no north-south divide in the distribution of popular cities in student accommodation investment. This means you do not have to necessarily invest at a place far away for a high ROI.
Leicester is followed by Birmingham, Leeds, Manchester and Liverpool in terms of returns on investment. Among the worst performers are Oxford, York, Cardiff, Edinburgh and Cardiff. However, the price of student accommodation varies, depending on the size and type of property such as detached, semi-detached, terrace and flat. Properties with more bedrooms have high potential as students prefer to live with others. Typically, a house with three and six bedrooms is a good option. Moreover, areas of a property such as dining areas and communal living spaces can also be converted into living spaces for more monthly income.
According to the figures, a property in Birmingham would yield 8.8 per cent annually and it would take nine years to pay off the costs. In Manchester a property would yield 7.5 per cent, while a property in Liverpool would yield 7.9 per cent and it would take 10 years to pay off the costs for both the cities. In Leeds it would take 9.5 years to pay off renovation costs.