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Student Investment Property - High Yields, Cash-Generative and Strong, Growing Rental Demand
Please click here to view a list of current student investment property available for sale
*** Parents ! : Looking for a student house to buy for your son or daughter going to university ? Call or email us to hear about our service sourcing these properties for you anywhere in the country - HMO legislation check, prices negotiated, property refurbished and letting agents sourced ! ***
Student Property Investments - New Build, Houses or Flats – Why you must add some to your portfolio
At Assetz, we look at student property as a long-term investment with high yields (well above those of traditional buy to let) that can typically be cash positive property investments, even in the first year. Student property has such high income that you can often repay a mortgage over around 20 years leaving all of the rental income for the investor at that point.
We believe that investing in student property, whether a student house or apartment, is a very wise move, and one that we follow with our own investments. Student numbers have significantly increased over recent years, as A-level results have improved dramatically, meaning more people are attending universities. Whilst university campuses are providing increased levels of in-house accommodation, they are not keeping up with demand; therefore, there is a huge increase in demand for privately-owned student investment property providing student accommodation.
 Student property is a positive, long-term income generator; there is near-guaranteed rental income in all of the best student towns and a constant and growing supply of tenants. Student property is a relatively hassle-free investment; the property is fully managed by an external management agency which takes care of letting, management, services such as electricity and water and all refurbishments, so the investment is virtually hands free. New build student property, as opposed to refurbished houses,is the most hands-off of the two possible types.
The student property that Assetz sources typically achieves between 6% and 7.5% gross yields on purchase price and many investments tend to be cash positive in the first year after all management costs and mortgage costs - additionally rent is sometimes guaranteed in the first year or the property may come pre-let with existing or pre-booked tenancies for the next student year.
In addition to this, unlike the buy to let property market over the last few years, student rental levels have been growing consistently on an annual basis due to consistently growing student numbers leading to greater demand than supply. This makes student investment property a most attractive option and has ensured rental incomes have grown consistently over recent years.
The student population is a very stable yet growing source of tenant demand, as there will always be students requiring accommodation and Government policies underpin continued student numbers growth. Demand is also less volatile than other property markets, due to the set ‘academic year’, which predetermines exactly when investors will be receiving an income from their investment. Very reliable data regarding the UK student population is readily available, which allows us to accurately map demand for student property, reducing the investment risk significantly.
Useful research :
These reliable data sources enable us to gain information on up-to-date student property supply and demand which, again, makes the investment much more appealing and less of a risk. The Higher Education Statistics Agency states that there were over two and a quarter million higher education students in the UK in 2005. During 2001, the National Union of Students stated that 600,000 students were renting in the private sector in the UK. In 2003/04 British universities provided accommodation for less than a quarter (21%) of potential demand.
 Various financial pressures mean that universities have very limited capacity to directly increase the supply of accommodation. This provides opportunity for developers of private student accommodation and investors alike, to become major players in the development and financing of student accommodation.
Many higher education institutions only provide accommodation for eligible first year students and foreign students, which does not come close to satisfying full demand. As student numbers rise each year, and with universities lacking the resources to keep pace with new accommodation requirements, it is becoming increasingly difficult for students to access university-operated accommodation, thus increasing the need for custom-built private student accommodation.
Future Market Trends
Student numbers are set to continue to rise in coming years. The type of student accommodation offered within the UK is set to follow current modern and bespoke trends, which is in keeping with the demand pattern we are seeing from students in this day and age. The majority of full time students attending universities in the UK are choosing to live in private rented houses and apartments with an increasing number preferring the benefits of new build student accommodation.
There has been an increase in overseas students attending UK universities in recent years, which is set to continue. An increase in the number of foreign students will place increased pressure upon the current UK student accommodation stock, making demand for private student accommodation higher.
Reasons to Invest in Student Property :
- More students attending university due to record A-level results and Government policy meaning increased demand for property
- Supply of in-house student accommodation is not keeping up with high demand (only 21% of all students have a dedicated en-suite student bedroom available)
- Low risk investment, due to near-guaranteed rental income and access to accurate statistics on student market – market is more stable
- Hands-free investment - fully managed by external agency - particularly low hassle with new build accommodation
- Gross yields of up to 8% achievable due to reliable rental market and high levels of demand – leads to cash positive income in the first year typically, and growing over following years
- Student property rental income increasing at around 4% per annum
- Increase in overseas students is increasing demand for accommodation
Focus On New Build Student Property
At Assetz, we source new-build student property from well-established developers in cities and towns that are popular with students and are undergoing significant student numbers growth. The developments we source are on-campus city-living apartments with state-of-the-art facilities including Internet broadband, plasma screens and fully fitted bedrooms, en suite bathrooms and kitchens. Internally each apartment is designed for occupation of typically between 4 and 6 students with en-suite study bedrooms, internal hall and a large communal kitchen and living area. The apartments are normally fully furnished within the price and the management charges often include all repair costs, furniture renewals. For the hands off investor this can represent a superb investment.
New build student property is a more specialised product for mortgage purposes and Assetz Finance sources these mortgages for our clients.
Reasons to own new-build student investment property :
- New build property means relatively low maintenance costs
- New build student blocks are generally fully managed by a central management company with on-site staff
- High-quality environment leading to a typical 25% premium on rents achieved per week
- Better off students tend to prefer this type of property
- Custom-built property complying with HMO ( housing in multiple occupancy) licensing rules
- Assetz have a steady stream of new build student halls available for investors to purchase individual apartments
- Can be cash flow positive almost immediately - depending upon mortgage chosen
Please click here to view a list of current student investment properties (houses or flats) available for sale
Focus On Refurbished Student Houses and Apartments
In addition to new build property we have now started to source refurbished student houses and apartments in cities and towns that are popular with students and are undergoing significant student numbers growth. These properties fully refurbished to HMO ( housing in multiple occupancy) standards with the requisite number of bathrooms, common area facilities and health and safety attributes. Being traditional property, the investor has two exit routes - either sell to another investor as a standing investment or sell back to the homeowner market as a house to live in.
Refurbished student property has a wider range of mortgages available than for new build property and again Assetz Finance sources these mortgages for our clients.
We source below market value (BMV) property for our clients and can use the discount as part of your mortgage deposit. this discount is pre-certified by a RICS valuation before you enter the buying process for your peace of mind.
Reasons to own refurbished student investment houses or apartments :
- Refurbished student houses and apartments have two exit strategies - sell to an investor or revert to homeowner use
- Can be purchased and renovated by the investor directly if they have the time
- Assetz have a steady stream of fully refurbished student houses available in several cities
- Can be cash flow positive in the first student year - depending upon mortgage chosen
With good well located Manchester student houses costing typically £65-£80 plus per room per week and student houses at the University of Sheffield costing £60-£70 per room per week it is easy to see how profits are to be made.
Please click here to view a list of current student investment properties (houses or flats) available for sale
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