As originally published in Mortgage Solutions.
More than 400,000 first year students will begin university in September and 80% of those students will start looking for their accommodation by March, according to research by the consumer watchdog, Which?.
So, if your clients want to invest in student accommodation, now is the time they should be looking for the right property to ensure they are not too late to meet the demand from September’s starters.
University hotspots are lucrative for landlords, with locations in areas with a high student population like Nottingham, Liverpool, Manchester, Leeds and the North East boasting some of the UK’s highest rental yields, according to Totally Money, which puts Nottingham at the top of the list with average yields of 11.99%.
High yield doesn’t have to mean low quality and the standard of student accommodation has been shifting steadily upmarket, according to research by student housing charity Unipol and the National Union of Students. The survey found that average price of student accommodation in the UK has jumped by nearly a third in the last six years, with the average rental bill now taking up 73% of the maximum student loan, compared to 58% in 2012.
This is partly caused by an increase at the top end of the market, with studio flats now accounting for 9% of student accommodation, up from just 4% six years ago. In fact, self-catered en-suite accommodation now accounts for the lion's share of student accommodation with 58% of total rooms and only 17% of students live in traditional HMOs with shared bathrooms and kitchens.
The report says that private sector investment now provides half of all student bed spaces, up from 39% in 2012, as a growing number of landlords have identified the opportunity in the sector. Lenders have responded to meet this demand and there is now a range of flexible options to fund investment in a variety of student accommodation, from traditional HMOs to purpose built blocks.
September may seem a long way in the future, but opportunity knocks now for investors in student accommodation.