Student accommodation, in recent years, has become a more and more popular asset int he UK for both national and overseas investors. This has been due to a number of reasons, but mainly because of the influx of international students - and UK students - applying for university courses. In 2016-17, UK universities saw an increase of 2% in the number of students attending courses. The University of Oxford alone saw an increase of 10% in its international student applications in the 2017-18 academic year.
But what makes student accommodation such a popular asset for investors?
There are a number of advantages that investors can find from this type of opportunity that other property investments don't offer, including:
• Higher demand than rental accommodation. There will always be students who need somewhere to live, especially with many UK cities having a thriving student population that continues to increase, and a very low supply of university owned accommodation
• Higher yields than many other residential opportunities. Especially with the impact of Brexit, yields for city centre properties have fallen to around 5 - 6%, however many student accommodations are still able to offer yields of 8% plus; this is generally down to students requiring less space and furniture, but willing to pay more for central locations
• Students are more likely to make prompt payments on their accommodation. This is something which splits opinions in the landlord world, and while it's not always the case, students are more likely to pay either upfront or on time for their rent. Many students receive a student loan which means there is guaranteed money to cover rent, or they will receive help from guarantors.
• Students are also less likely to complain about their accommodation. While they are willing to pay more for amenities such as gyms and cinema rooms, students are less demanding when it comes to things like furniture quality and smaller issues such as general wear and tear.
Many sources will highlight the winter months as the ideal time to invest in property - however the timeline for investing in student accommodation is slightly different. While investing in the winter months in traditional residential opportunities will allow you to get a better pick of investment-worthy units as most owner-occupier buyers will be focusing on holidays and money saving, this doesn't apply to student accommodation. As the academic year is a time frame set in stone, there are only generally two times of the year when students will be looking for accommodation for the next 12 months - in June/July for September, or in October/November for January. The earlier of these is by far the most popular, with the majority of students starting university courses in September/October in the UK.
It also depends on what type of student accommodation you are looking to invest in. In recent years, there has been a shift in the types of properties both investors and their tenants are looking for. While Houses of Multiple Occupation (HMOs) have always been the more popular choice, in the last few years more and more student renters want purpose-built, modern, high specification micro-apartments, pods and studios.
HMOs traditionally rent to students in June or July, with a 12-month contract, whereas apartments will sometimes from September to September, or September to July. With this in mind, May is one of the best months for investing in student accommodation to maximise profits. Investing in May allows you time to exchange contracts, time to sort out furnishings, and time to advertise your opportunity to potential tenants looking for accommodation over the summer, while having a minimal amount of un-tenanted time with no rental income.
StudentHomes.net said, "May or June is a great time to start looking for suitable student property... as people wishing to sell existing student lets put them on the market as [universities] near the end of term and educational year."