Thursday, October 1, 2020
UK

What to consider for UK student property investment

student property

The UK student property investment holds huge opportunities as there is no shortfall of potential student tenants looking for a place to live while they study in the UK. Whether they are from within the UK or from the overseas, having a place to live is the foremost criteria for every student. An accommodation near a place of education adds to the value of an UK student property investment as it saves on much resources for students.

A student will look for an accommodation near a college or university as it comes with a number of advantages while studying at a college or a university. This is especially so in case of big and expensive cities like London where distance matters as travelling involves a lot of expenses and time. A long distance between the place of living and the university may be crucial for students which translates into high overall costs of living.

As higher education in the UK is of international standards and boasts of universities which rank among the top in the world, it attracts hundreds of students in universities across the country. This rising number of students means requirement for more student accommodations. This is where the opportunity for UK student property investment lies.

The student accommodation sector in the country is also the fastest growing segment across the broader UK property segment.

The risks associated with UK student property investment is also low compared with some of the other property investments. For example, in terms of rental issues, there is more certainty of earning a hassle-free rental income out of the investment as it is usually not the students who pay their rent, but it is their parents who are responsible for paying the rents. As Sally Fraser of Stacks Property Search in Brighton says, ‘investors can be concerned that collecting rent from a group of young people barely out of teen-hood with no income is a risky business. In reality, there are systems in place that make rent collecting straightforward, and students invariably come with guarantors in the shape of parents’.

Student accommodation investment types

The student accommodation sector in the UK also holds a lot of potential as there are a number of ways for UK student property investment. These student accommodation can be any type of property including houses, flats, private halls of residence etc. These student accommodation properties are multi-lets or those which are let out to a number of students. This allows for higher rental incomes in return for UK student property investment as rents are typically charged on per student basis, which means a much more rental yield out of the property compared with one occupied by a single family or household.

Add to this the advantage of a property located near a place of education such as a college or a university, the renal yield rises significantly, turning your UK student property investment into a potentially sustained source of income over the long term.

Implemented in an appropriate way, the UK student property investment may even be the primary source of income for the investor, which may result in higher savings and may enable investors to buy their next property within a relatively shorter period of time. So, UK student property investment may result in a considerable portfolio over time.

Since student accommodation investment is the one in high demand, it also allows for faster repayment of mortgages, increasing the net profit out of the property investment once the mortgage is repaid.

Student accommodation standards

Student accommodation

Though students are not much demanding in terms of living facilities and services, many are willing to pay a bit higher in return for better facilities as students want to experience the same levels of comforts as those at their homes. Many of such students have high expectations out of their ‘secondary’ homes and are prepared to pay increased rents in return for quality accommodation.

A clean and well kept-up property is another important aspect for ensuring decent returns on investment as well as maintaining high occupancy levels at the property. Many students prefer a fully furnished property as they get all the facilities under one roof.

Having a property with emphasis on the common areas such as a good size lounge is a good idea since it gives students the opportunity to interact with each other. As students are a sociable group, focussing on these common areas raises the interest of students in a property. A well-planned and equipped common area may be a big selling point for any UK student investment property.

Considerations for UK student property investment

As UK student property investment is no different from any other property investment since it is fundamentally a property investment, due diligence is an essential part of the investment. Beginning with the purpose of the investment, considering the financial and other aspects such as your monthly income and debts, finding the appropriate mortgage deals, and, most importantly, deciding on the right location for the property as well as the type of property to invest in – all require detailed research into the local property market.

A better idea is to invest near universities which are the most popular among students and draw more applications annually. Universities which attract more international students each year may be the best options for UK student property investment locations as they strive to boost their global standing which means a potentially regular flow of student tenants into the property.

Make sure to review the prevailing rental costs in an area and price the rental property competitively before committing to the UK student property investment. Accessing the services of letting agents for UK student property investment is important as they are specialists in the sector as well as the local area and will be able to guide you on the location of the property and type of property suitable for your UK student property investment. It will also ensure that the student tenants referenced by the letting agents have undergone background checks which may mean less hassles when you finally rent out the property to them.

Important:
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

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