How To Invest In Student Properties

Written by Jane Wardle on January 14, 2019

Updated June 27, 2019

Student accomodation

Anyone who graduated from university over a decade ago will remember student accommodation being run-down, freezing house shares with an array of problems. In more recent years, students are choosing to spend more on their rent and live in luxurious homes and purpose-built student accommodation.

This shift in student housing has created an attractive opportunity for property investors across the country. Student housing offers a diverse range of properties all across the country, and there is no shortage of tenants looking for places to live. If you are considering investing in student properties, then read on to find out the types of student accommodation, the best locations and how to invest.

Getting a mortgage for student accomodation can be more challenging, so it is often best to speak with a specialist broker who can advise on the requirements, rates and products available.

Student property investments

Thousands of young people from all over the United Kingdom leave home every year to head to university. Thanks to student funding being readily available to all, more and more youngsters are choosing to attend university, despite the rising costs.

As a property investor, this creates an exciting opportunity to invest in student accommodation and make a healthy return. There are some advantages to renting out a student property as opposed to traditional buy to lets, including high occupancy rates and an almost guaranteed source of income.

The majority of universities across the country have more students than they can provide campus housing for, which has resulted in the market for alternative student accommodation booming. As the rental amounts you can receive on a student property are usually higher than with a non-student residential property, you can often pay off a buy to let mortgage much faster.

As student accommodation is shared, you will likely be required to get an HMO (House in Multiple Occupations) licence from your local council. The terms and costs of these licences vary between councils but are usually a requirement for homes with multiple tenants.

Student accommodation types

There is a range of different types of properties that can be used for student accommodation, including houses, flats and private halls of residence. The majority of student accommodation caters for multiple tenants in one house, and they will often have shared facilities such as kitchen, bathroom, living room and garden.

Whatever the type of property you choose to invest in, if it has multiple rooms and the ability to be split between multiple tenants then it can be used for student accommodation. Rents on these properties are charged on a per-tenant basis, which will usually give a much higher rental yield than a property being occupied by one single tenant or family.

When you are choosing a student property to invest in, remember that the closer the home is to the university, the more rent you can charge. Look for properties that are within walking or cycling distance from the campus.

Student accommodation locations

When you are looking to invest in student accommodation, you should pick a location with a large number of students. London is most investors top choice, as there are so many universities and students in the area. However the initial investment required is much higher than in other areas. Other popular locations for student accommodation investments include Manchester, Kingston, Edinburgh, Durham and Brighton.

Student accommodation tenancies are always for one year, and the likelihood of tenants staying for longer is slim. You need to be sure to choose a location where there will be new students arriving and looking for accommodation year after year.

Choose a location that has a university that attracts a large number of students, or cities and towns that have more than one university in them. This way there will be more prospective tenants looking in the area every single year.

How to invest in student accommodation?

There are various options available to investors that are looking to invest in student accommodation. You could choose to purchase a large house nearby to a university and rent it out to students as a shared home.

Another popular option is to purchase bedrooms or flats within specifically built student accommodation buildings. There are more and more of these buildings popping up around universities, and they offer landlords an interesting investment opportunity. You can choose to purchase just one en-suite room or ‘pod’ or buy a floor of cluster flats.

These types of blocks of student accommodation usually feature many sought after facilities for students, such as Wi-Fi, cafes, communal areas and gyms on sit. Investors can purchase these types of student accommodation from the property developers, and they often offer compelling deals such as high yields, professional on-site management teams and full legal ownership.

Investing in bespoke student accommodation such as pods or cluster flats can seem like a good investment, but they can also be very difficult to sell on again at a later date and may lose their some of their value over time compared to a traditional property.

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