Students see going to university as an investment in their future and increasing numbers of them are opting to go on to further study rather than take a job when leaving college. This creates even more opportunities to make money from student property as demand just keeps on rising even in the economic downturn.
Demand is such that compared with either residential or commercial property, student property is consistently offering far higher returns for investors.
Student property is one of the easiest ways for buy-to-let investors to profit from property. It even takes away the need to research hotspot areas because all areas where there are large numbers of students to cater for will be hotspots.
This is because you have that key ingredient – demand. There is a major shortage of student accommodation in the UK.
Take it from one former student, most will have very little time to consider where they want to live and in general as long as a property is in reasonable condition and within walking distance of their campus, they will not waste too much time around their studies shopping around.
They will however be competing with other students to find the best accommodation in those areas.
Driven by increasing numbers of foreign students opting to study in the UK and more students opting to study to increase their chances of getting a job, UK student accommodation is now firmly on investors’ radar.
It has by most measures rapidly outpaced the growth of the UK’s conventional property market to the point where The Times this this year ranked student accommodation as the top asset class in the UK property market.
Recent research carried out by buy-to-let mortgage specialist Paragon Mortgages shows that students generated the highest yields for landlords in 2011.
Last year in the UK investors put nearly £348 million into the student property market according to research from CB Richard Ellis. Investors are now seeing average net yields of up to 7%.
By leasing property to students on a per-room basis, landlords were able achieve yields of 6.45%, compared to 5.94% from properties rented out to young couples.
Knight Frank recently revealed that total returns from student property will increase in 2012 to 12% with rental yields growing by 5%.
A major benefit of investing in student accommodation over other property types is the higher occupancy rates. These tend to be 99% due to undersupply, particularly for higher quality accommodation. This therefore removes any worries about void periods.
Looking at the best regions to invest in student accommodation, the West Midlands has been a happy hunting ground for investors according to a study by Paragon property.
The region is home to nine universities, including Warwick and Birmingham and offered the highest average annual yields for investors of 6.5pc.
With these kinds of returns on investment, it doesn’t need a degree to understand that the student property market is among the best investment opportunities out there.
With this in mind we are about to release an exciting opportunity to invest in a 120 bedroom high quality purpose built student development in Stoke. This investment is guaranteed to deliver high returns and you can even use a pension to invest as this opportunity is SIPP approved.
- Invest from £5,000
- Prime student location
- Achieve 4% return per annum during construction (expected completion August 2013)
- Achieve 7.5% fixed rate annual return on investment for 5 years
- Ring fenced fund in case of rental voids to protect your investment
- Exit strategy at year 5
- SIPP approved