Is Student Accommodation A Good Investment In The UK?

Student accommodation investment is a fairly new asset class with developers promising high rental yields and assured rental income for a number of years. This strategy of property investment is one of the UK’s best performing investments, outdoing many of the UK’s traditional property investments such as HMO’s and buy-to-lets.

Why Is Student Accommodation Outperforming Other Investments?

There is such a good light on student accommodation investments in the UK at the moment because there has been an increase in the number of students applying and attending Britain’s top universities. All across the UK, there has been a rise in student acceptances due to universities being more lenient with the number of students on each course. On top of this there has been a spike in overseas students choosing to study in the UK.

UCAS figures from June 2013 showed applications increased by 3.1% over the last year. It also stated that there was an increase in non-EU students by 6%, with a 25% increase from Malaysia in particular.

Knight Frank saw an average 7.8% total of returns across Britain back in 2013 (http://www.knightfrank.com/news/knight-frank-student-property-forecasts-solid-rental-growth-and-an-increase-in-equity-inflow-as-accommodation-demand-increases-02021.aspx) which further emphasised the success of the student property sector.

How Are Investors Making Money From Student Accommodation?

student accommodation investment

Student accommodation, more specifically purpose-built student accommodation, can be suited to a wide range of investors. Whether you are building a more diverse portfolio, retiring, looking for passive income, or you are an overseas investor looking for a ‘hands-free’ investment, a student property can be a promising investment.

Purpose-built student accommodation is off-plan, which means that you can purchase it at a better deal, before construction is completed. Along with a guaranteed rental income of up to 9% for up to 5 years, the returns can be excellent for any investor. It is also fully managed by a third party, so no management or maintenance fees will be coming out of your net profit.

Student accommodation investments can start at just £45,000 and go up to £100,000 depending on the location and the property itself. If you invest in a student property costing £57,995 with a 9% net rental return per annum, you can see a profit of about £5219,55 each year. This passive income in a recession-proof sector and a rising demand makes it attractive to UK and overseas investors.

 

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