Student accommodation is a lucrative investment asset not always on the radar.
The news that UK residents wanted to leave the European Union came as a blow to many people. However with this brought a depreciating pound. Good news for overseas investors wanting to snag a bargain thanks to the favouring exchange rates. Many are keen to take advantage of the situation where property is effectively 20 percent cheaper.
Owning property in the UK has immense appeal. The market is robust, values rise and the country is seen to be the perfect safe haven. However with escalating prices in London, many investors are having to look at alternative, and more affordable options. Cue, student housing.
Great Britain is one of the favoured destinations for overseas students. Having a string of universities offering a range of education options, there is a certain level of credibility that comes with attending a UK university. With growing numbers of students both locally and internationally attending, inevitably there is a strain on the accommodation.
As a rule of thumb, most universities offer housing for students for their first year of attendance. After this most students have to seek their next home. For international students, there tends to be a preference for a high caliber of accommodation. Preferring new buildings that have 24 hour security and lift access, that are not common in the traditional UK university accommodation offered privately.
In response to this demand, many developers are building accommodation suited to the needs of this demographic of student.
Why consider this market?
1. Low values.
When purchasing a unit within student accommodation the price is naturally smaller than that of a whole property. This means you will need less funding for one unit and you can even expand your portfolio at your own pace.
2. Hassle free.
Many developers offer to manage to the property as part of their services. This includes fixing any repairs and sourcing a tenant making for an effortless investment.
3. Guaranteed rent.
The student market is competitive, which works in your favour. There is a lack of good quality housing, so developers can often guarantee the rent for you thus you will also receive a healthy rental yield too.
4. High demand.
Records revealed that there were over half a million university students in the UK in 2015. This number is expected to have increased, but either way it shows the sheer pressure on housing.
5. Good tenants.
If you are aiming for the international student market then it is worth remembering that many of these students have paid a fair amount in tuition fees to attend university overseas. Thus they are more likely to be studious and good tenants. Many of whom pay six months rent in advance.