Quote Ref: WS1


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Do student lets offer attractive investment opportunities?

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A news piece in The Telegraph recently highlighted how a record amount of students (535,200) took up higher education places through UCAS in 2016 – suggesting that the need for good student accommodation is more important than ever.

And student lets come with the added benefits that they are typically arranged early – often up to six months in advance – minimising the risk of void periods. Plus, there is a guaranteed market that is predictable whatever is happening in the economy.

So, are student lets an attractive opportunity for landlords? The facts quoted from property experts within the news story certainly may seem to suggest so:

  • student numbers in London are growing at 15 times the supply of rental property – but high entry costs and low yields are a deterrent for all but the wealthiest investors (James Davis, Upad);
  • the biggest student population in Europe is in Manchester, so you know demand will outstrip supply (Rob Bence, The Property Hub);
  • good yields from 5% to 7.5% can be generated in Brighton (Sally Fraser, Stacks);
  • the highest yields are generated in the North - at an average of 6.6%, they are double the 3.3% generated in London (OnTheMarket.com).

What should aspiring student let landlords consider?

Perhaps most importantly, investors should beware of regulations that surround houses of multiple occupation (HMOs) - especially as they have recently been updated. 

In terms of the type of accommodation that is popular with students, “well-modernised, clean, low-maintenance properties that are close to their university and social life” says The Telegraph.

Alternatively, investing in purpose-built student accommodation could be fruitful, with investors in new schemes such as X1 The Campus in Salford seeing net yields of 6% to 7%, and with some developments suggesting an 8-10% net income fixed for 10 years as achievable.

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