What Makes Student Property Such An Attractive Prospect For Buy To Let Property Investment?

There are over just under two and a half million students enrolled in higher education institutions across the UK. The majority of these, 1.8m, are full-time. From undergraduate to postgraduate and to research posts, these numbers are increasing year on year. As higher education and a degree becomes a necessity for those wanting to make waves in their career of choice, students both domestic and from overseas are heading to the UK in their droves.

For buy to let property investors there has never been a better time to put their money into Purpose-Built Student Accommodation (PBSA). Bricks and mortar is an extremely robust asset class and combined with the steadily climbing fortunes of the student property market, there are a great deal of wise investments to be made.

In 2018 alone investment in student property is estimated to rise by 17%. That means that a total of £5.3bn will be put into new student accommodation developments and buy to let investments. Since 2016 significant growth in investments has been achieved. A total of £4.6bn invested in 2017, a big jump from the £3.5bn poured into the market in 2016.

More investment means high demand, and it’s this demand that is driving the incredible upsurge in student property. These days it’s not simply about just having a roof over your head. The days of the traditional student ‘digs’, a la The Young Ones, are long gone. The demand for high end, luxury accommodation is higher than ever as more and more students elect to move away from home for higher education. The rise in tuition fees has placed a greater emphasis for students on greater outcomes and employability prospects. This in turn means more students heading to higher quality universities and away from home.

Such population flights have seen demand exceed supply greatly. There are now 3.5 students enrolled for each room available. New developments are snapped up and leased out as soon as they are ready. Increased demand domestically is accentuated by growing numbers of overseas students making their way to the UK’s universities. Despite the fears and nervousness brought about by Brexit, applications to UK universities from prospective overseas students has increased by 2.2% since 2016. The high regard that the UK’s universities are held in should weather any Brexit storm and such good reputations will keep on attracting overseas students.

Large numbers of these overseas students are from the Middle East and Asia, particularly China. Overseas students from these regions are a boon for buy to let student property investors, as they are more likely, by being overseas and generally unable to return home during end-of-term, to take longer tenancies. For investors, it provides more clarity and security and of course means higher returns.

High yields are PBSA’s greatest asset. With some smart investment, a landlord can achieve the perfect combination of low costs and high returns, with the average weekly rent of a room currently standing at £126. Student accommodation in cities such as Liverpool and Manchester offer incredible yields for costs that measure lower than the likes of London, Edinburgh, as well as smaller cities like Blackpool. Three areas in Liverpool pull in some of the highest yields in the country for the lowest prices. Incidentally, both Liverpool and Manchester both attract massive numbers of overseas students.

But like any investment, care must be taken when looking to make the leap. In recent times the government has applied punitive measures to buy to let landlords. Since April 2016, stamp duty for buy to let and second homes was raised to 3% up to £125,000. For an idea of how stamp duty may

affect your purchases or investments, this handy Stamp Duty Calculator and guide will give you the help you need: https://www.rw-invest.com/stamp-duty-calculator/

Investing in student property is one of the most secure and profitable ventures in the UK. With such low entry costs and high yields, it is a great way to diversify your property portfolio or to begin your investment journey.