Student housing has undergone a radical change over the course of a generation leading to an influx of investors queuing up to take advantage of the evolving buy to let market.
Despite uncertainty and warning signs that the buy to let market may be struggling, investing in Britain’s private rented sector has emerged as a property asset attracting global investors and those looking for a great return on investment.
Property investment presents strong opportunity to become extremely profitable. However, you must ensure you build your success on solid foundations. One approach that is emerging as an increasingly popular choice amongst prospective investors is student accommodation. Investors can benefit from lower house prices in student hotspots prevalent across regional cities and higher rents from a wider range of tenants.
In 2017, a total of 2.32 million students were reported to be studying in the UK at higher education level, pushing up the demands for the student property market over recent years. Landlords and potential investors are discovering that purpose-built student accommodation (PBSA) is a more viable option than standard buy to let investment. PBSA has introduced a new wave of property and property investment companies like RW Invest recognise the staggering appeal student accommodation brings to savvy investors keen to generate unbeatable returns. PBSA remains attractive to landlords as they can be rented to multiple tenants, as a group or individually.
Renting to multiple tenants can offer healthier income security. If one tenant falls behind on their rent and other tenants continue to keep up with payment, this reduces the likelihood of the landlord defaulting on their mortgage. Similarly, void periods refer to the time a property is unoccupied therefore producing little or no rental income. By letting a property to multiple tenants, this limits an investor’s exposure to income shortfalls.
Demands are soaring for student accommodation around the country, providing a compelling argument for investing outside of the capital and neighbouring southern counterparts. Traditionally, these areas possess large scope for high capital growth. Capital growth, or capital appreciation, refers to the profit one can obtain if you sell your property for more than you initially paid for it. This can be enhanced through a variety of factors. You must ensure you perform due diligence and search for desirable locations with strong potential for regeneration. However, cities such as Liverpool, Manchester, Birmingham and Leeds have seen substantial rises in property value over the last few years.
The average price of a home in Liverpool rose 8% over 2017, outperforming the national average of 0.6% during the same period, with reports also stating that UK house prices are rising faster than wage increases. Student property is certainly a growing market for investors with transaction volumes far surpassing the £5 billion mark. This is leading landlords in the South to sell unprofitable buy to lets and move their hard-earned capital up North in order to become more prosperous, highlighting just how important location is when choosing your next investment.
