The Risks and Rewards of Property Investment in Student Accommodation

The Risks and Rewards of Property Investment in Student Accommodation


Property has always been considered a good investment, and there’s plenty of online advice these days if you’re keen to educate yourself about real estate investing. One area of the market that is increasing in popularity, especially in the UK, is investing in student accommodation. Traditionally, students have been portrayed as a poor prospect as tenants because of their carefree lifestyles and low incomes; and clichéd sitcoms like The Young Ones have reinforced the potential horrors of having your property infested with anarchic, drunken misfits. But all that is changing.

Today’s students pay serious money for their education and consequently expect something a bit more up-market; and definitely a lot of the comforts of home, like wireless broadband, private study areas and gyms, not to mention clean, spacious living conditions. Despite the rising costs of tuition fees, numbers of students entering further education are set to rise. And so the market is seeing a huge rise in investors as developers seek to meet growing demand.

For those with money to invest, whether UK citizens taking advantage of their new right to cash in pension funds early or overseas buyers seeking to spread their portfolios more widely, it’s an investment opportunity with the potential to be much more lucrative than the average buy-to-let. It’s also becoming a more accessible market: many developments are purpose-built, consisting of large numbers of student pods or units, each one of which can be purchased individually, providing a lower entry level for first-time or small-scale investors. But if you are interested in taking this step, what should you be looking for in a development?

Location, location, location

Check out demand before choosing a city to invest in. As well as increasing numbers of students within the UK, we’re also fortunate that our higher educational establishments enjoy a terrific international reputation, thus attracting more and more overseas students too. So do your homework on the best universities predicted to invest most in their students and therefore achieve high numbers of applicants.

Once that’s been established, look at the location of the development itself. The closer it is located to the University, the better the transport links and the better the amenities in the surrounding area, the more chance there is of your property being let out quickly and consistently throughout the year. This obviously provides better returns over the longer term – void periods are one of the biggest money pits for investors in rental property.

Style and substance

If the property is still under construction, do a bit of homework on the developers before you hand over your hard-earned cash. Who are they and what’s their track record in this field? Do they know the local market and what else have they built? Are they using a reputable, preferably award-winning, construction company?

A managed investment

You will not want to spend time carrying out routine maintenance and trouble-shooting on a property which could conceivably be on the other side of the country. Find out the arrangements for property maintenance once the building is occupied. Established buildings that look good and are kept in good working order will always higher numbers of attract tenants, so an experienced and professional management company is a must to attract consistently high rental demand and take any potential headaches off your hands.

What’s your exit strategy?

All good things must come to an end and there will come a time when you want to sell. Be aware that, unlike a traditional buy-to-let, your options will most likely be a little more limited. Check out what they are before you sink your money into it. Often, you can benefit from selling to another investor looking for the quick purchase of a ready-built unit with a proven track record of letting and an instant income.

Investing in student accommodation really can prove valuable and lucrative when done properly, and many are profiting from the changing landscape in higher education every day. Why not take a deeper look at what’s on offer in the UK?