Student Investment Property
High yields. Totally hands-off investment. Strong nationwide rental demand. Cash-generative. Student accommodation has it all.
Click here to view our range of student properties.
Student accommodation has always been one of Assetz’ primary recommendations to any investor, whether you’re looking to add to your existing property portfolio, or if this is your first ever property investment. Our reasoning for this is quite simple; it’s a low risk, high yielding and totally hands-off investment and our clients have profited hugely over the last five years from following our recommendations in this sector. It is also a sector where Stuart Law, the founder of Assetz, has made significant investments in his own portfolio.
With UCAS reporting that student applications for 2009-2010 are approaching 2.4 million (up 34% from 1996-1997)* and a huge national shortage of student accommodation, this is still a perfect time to take advantage of current investment conditions. With high rental yields (typically between 6-10% gross yields depending upon the property type) and totally hands-off, hassle-free ownership, student accommodation ticks all the boxes.
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Still not convinced?
Knight Frank have reported through their own independent research, that only 50% of all students in the UK have access to high-quality purpose-built student accommodation. This figure drops dramatically to 20% when you compare the student/purpose-built housing ratio in London alone**. This means that there are nearly 100,000 students in London who do not have access to purpose-built student accommodation, helping to create a huge demand in a market with very limited supply, ensuring rents remain high and your property stays tenanted.
There are three types of property that Assetz sources for student accommodation:
- Purpose-built student accommodation attracts a higher quality of student - higher rents and overseas students with minimal budget restrictions. These are effectively private halls of residence with rental units of studios up to 5 bedroom cluster apartments.
- Refurbished houses converted to full HMO (Houses in Multiple Occupation) standards. This delivers much higher yields with student use than the same property rented to a single family.
- Individual apartments within blocks adjacent to university campuses. This takes advantage of distressed sale opportunities in the residential market place but utilises the property for student purposes to significantly increase yield.
Other benefits of investing into the student property sector are:
- Cash-positive, long-term investment – typical rents are significantly higher for student properties than a comparable BTL property in the same city. As a result, mortgages can often paid off in 20 years or less from the net rents received.
- More people attending universities, creating a solid and sustainable demand. Student numbers are set to continue to rise in coming years – especially in London which has the most students of any city in Europe and the most international students of any city in the world**. Other cities with large student populations include Manchester, Leeds and Sheffield.
- Minimal voids – tenanted for almost all of the year and you typically know seven months in advance that your property is tenanted for the next academic year due to pre-lettings.
- Hassle-free investment – private halls are managed by on-site management teams who will handle all bills and ground rent, meaning you only have two outgoings: mortgage and management fee.
- Rental income has increased by 5% each year for the past six years in the student accommodation property sector. In 2009, many schemes actually achieved 10% gross rental increases.
- Student property has continued to be one of the most resilient investment sectors in the UK during the economic downturn, with most rental incomes and property values remaining stable or increasing***.
- New build properties available - houses and/or flats, as well as refurbished houses.
- Competitive finance available on all our properties.
- Exit strategies – although we recommend student accommodation as long-term income investment, long-term provable high income on a property makes a property much more saleable. Converted HMO houses can also be converted back for residential use as an alternative. Standard apartments near to university campuses can be sold for traditional residential purposes.
- All of this helps to reduce the risk to the investor!
Click here to view our range of student properties.
* Source: Higher Education Statistics Agency
** Source: Knight Frank Student Property Report 2010 (Click here to read the report)
*** Source: Savills Student Report 2009 (Click here to read the report)
