Tips for successful investment in student buy-to-let properties



According to Universities UK, the number of students in the UK studying in the 2017/18 academic year was 2.32 million and this figure is only predicted to increase over the next couple of years, particularly for international students coming to study at the UK's most prestigious facilities such as Oxford, Cambridge, Durham, York, Sheffield, Manchester, and London. With millions of students who will be looking for accommodation in their university towns, there has been a shift from the traditional 'student housing' where on average 4 to 6 students would share a house together, to students looking for more 'boutique' apartments to live in with their classmates.


While the student market (as with any tenant market) is ever changing, there are a few factors which have not changed for what students look for in accommodation. Getting to know these and doing thorough research on your market will help you decide; a) if you are a developer, where is best to build and what kind of accommodation you should construct, or b) if you are an investor, what developments could be best for your portfolio and finding the right tenants for your buy-to-let investment. While tenant preferences will often change as different types of accommodation become available to the market, there are a number of things that all students will always want including: accommodation in student dominated areas, easy access to transport links to city and further afield, easy travel to their university campuses, and close by local shops.


Student accommodation is considered one of the safest for investing in buy-to-let as it's a type of dwelling that will always be in demand across the country, meaning investors can explore areas that are not the traditionally high capital growth locations. Student property is very attractive to landlords and buy-to-let investors who are looking for a secure investment also, as the income security is higher than on a traditional rental unit. Student properties are rented to multiple occupants, either as a group or individually, meaning that the rental payments are coming from multiple people; if one tenant were to fall behind on their rent, the landlord will still be getting income from the other residents. These other residents (or a guarantor - a popular requirement when letting to students) can cover the cost of the tenant falling behind. This is an advantage for both the landlord and their mortgage lender.


Changes to stamp duty and mortgage interest tex relief in the UK has also been a factor promoting a shift towards less traditional types of investment, student property specifically. With the purchase of a second home or buy-to-let now coming with a 3% stamp duty additional surcharge, student accommodation has become a more attractive opportunity to investors as they "need far less capital in order to gain exposure to student lettings" (This Is Money).


Property Investor Today has outlined some of the key factors to consider to ensure you can be as successful as possible when investing in student buy-to-let opportunities:


Choose the type of student accommodation you invest in wisely, choosing the type of investment that will best suit your portfolio. Purpose-Build Student Accommodation (PBSA) is a growing trend for investors due to the increase in the number of students looking for boutique accommodation whilst studying. Another option is Houses of Multiple Occupation (HMOs), however it's important to consider the effect that the regulation changes coming into effect late this year will have on a HMO investment. Any landlord with this type of property will have to get a licence if it will be occupied by five or more people living in two or more separate rooms.


Research your developer; it's important to invest in a development whose developer has experience in student accommodation. These types of developments require different specification and needs to match what tenants are looking for.


Make sure the area the development is in is a good fit for the tenants you want. Successful student accommodations are close to university campuses, have good in-city and country wide transport links, and are close to local shops.


Current student developments with Global Edge:


Metro Apartments, Sheffield

Metro Apartments is a completed development ideally situated close to local transport links and local shops, offering boutique student accommodation over 80 en-suite pods in clusters of 2, 5 and 6 rooms. The development offers 7.3% assured returns for 1 year and is largely let out for the 2018/19 academic year.

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