Student accommodation has been one of the fastest-growing property investment strategies in recent years. Both new and experienced investors have found great success owning PBSA in some of the UK's booming student hotspots.
As one of the best performing asset classes over the last three years, student accommodation in the UK has seen a spike in popularity that shows no signs of slowing down.
Here are the 5 top reasons why you should consider investing in student property...
1. Constant stream of high rental demand
If you own a student property investment near a university, you'll never have to worry about rental demand. This is because more and more students are looking away from traditional student halls to more private rental apartments and studios.
During the academic year 2020/2021, PBSA renting in the United Kingdom saw an overall growth of 1.8% on the previous year—even during Covid-19. This proves that student accommodation is one of the best investment classes for both security and profitability.
2. Some of the highest rental yields in the UK
Student property is known for providing some of the most attractive rental yields of any property class. In some cases, investors can earn upwards of 7% annual rental yields on the value of their property.
This is because private student accommodation is in very high demand, mainly if the development is close to a large university with many students from abroad.
3. Good capital appreciation
You'll rarely find a completed, private development of student apartments or studios near a university that hasn't been completely sold. Most student properties are sold to investors in the off-plan phase of the development process.
Savvy investors are always on the lookout for fully completed, tenanted student accommodation. Due to the high rental yields and almost guaranteed rental income, they're usually willing to pay a premium to get it.
4. Usually cheaper than any other property class
As mentioned in the last section, most student accommodation investment opportunities are sold off-plan to investors. This means that the developer can offer you the unit at a much lower cost than the property's actual value when the construction is completed.
Another factor as to why student accommodation is usually cheaper is that these units are generally studios or part of a cluster.
5. Virtually guaranteed rental income, paid on time
You may think that this is a strange point to make when investing in student property. Can you rely on a student to make sure his rent is paid on time and in full? Yes, actually! This is because most students aren't responsible for finding the money to pay their rent.
Students studying away from home usually receive a grant from the government or their parents pay for their accommodation, and every parent wants the best student accommodation for their child. This means that, as an investor, you're pretty much assured of receiving your rental income on time and in full.