Providing property for students can be profitable and extremely rewarding however it is important to fully grasp the market before committing yourself to an investment. Student numbers are increasing exponentially, not just from the UK but overseas, as a surge of international applicants pushes up demands for student accommodation in the UK.
Research produced by Savills showed that investment in student accommodation had risen by 17% in 2017. Therefore, investing in student accommodation presents robust returns presenting a secure investment, however, investment into student property only remains a wise choice if it is thoroughly researched and fully considered.
Student property has a multitude of fundamental differences compared to letting to none students therefore it is essential that you are aware of the potential benefits and possible pitfalls that can arise in the property market before investing. Numerous factors ought to be considered and prospective investors ought to ask themselves a few questions to ensure student property is the right investment for them.
As an investor, what is your ultimate goal from the investment? What type of student accommodation do you want to invest in? Are you inclined toward modular buildings that are quicker to install? Or do you want to go for the traditional approach of constructing buildings from scratch? What strategies can you employ to find a property that secures the highest and most sustainable returns? Property investors should consider all these questions before committing themselves to anything long-term.
Once you have clarified your investment goals and property preferences, it’s time to explore financing options for your student property. If you are one of those investors who need a short-term solution to bridge the gap between your purchase and securing a more permanent financing arrangement, opting for Bridge to Let Mortgages with LDN Finance (or similar firms) could be a great choice. This type of mortgage can help you to manage the transition smoothly and effectively. And, if you need quick financing, a bridging loan might be a more suitable option. Bridging loans can provide short-term funds to help you secure a property rapidly before transitioning to more permanent financing solutions.
Alternatively, you might consider family loans or gifts, which can offer additional financial support without the need for formal loans. However, it’s important to have clear agreements in place to avoid potential misunderstandings. Each financing method has its own set of advantages and drawbacks, so it’s essential to carefully assess your financial situation, investment goals, and the specific characteristics of the student property market before making a commitment.
Consider Market Conditions
Researching the market conditions when considering whether to invest in property is a wise move to ensure that the demand is strong. Especially for student accommodation, a good indicator of demand would be to find out the university attendance statistics in the UK, this way you can differentiate between which locations have the most demand and which of those have an undersupply of student accommodation.
Not only does student accommodation appeal to UK residents but also those from overseas. RW Invest, property investment specialists, produced an up-to-date student market report stating,
“University is the premium option of higher education and over 564,000 people applied for higher education in 2017. Consequently, depending on the area, demand is increased due to undersupply of housing in most major cities. This pushes up the rental returns available for buying to let investors.
“In a breakdown of the current student population, 81% are from the UK, whilst 13% are from outside of the EU and 6% are from within the EU.”
Due to the appeal to international students, it is a wise move to discover this market further. By appealing to this market, investors will see a continued demand as international students choosing to study in the UK is escalating year after year.
Pick the right location
Location is imperative when it comes to student accommodation. Students desire accommodation options that are in proximity to their university campus. Therefore, securing a property within walking distance of these establishments is a perk for many students.
Keeping a close eye on the area and the redevelopment in the region is a good indicator that the area is up and coming. If there is an influx of new developments, facilities, and services, the chances are more students will flood into the area to take advantage of the burgeoning region, boosting rental demand for your property, and with demand comes the potential to increase rental charges, a bonus for any investor. Furthermore, as the location gains popularity due to mass appeal, this will boost the property’s overall value, increasing profits due to capital appreciation, and creating an excellent rise in value since the property was initially purchased.
