The growth of the student population in the UK continues to rise. This is good news for you as a property investor. Why? Because the student rental market usually offers a greater return on investment than other buy to let strategies.
The Numbers don’t lie
There was more than £4 billion invested in the student rental market in 2015. This investment came from UK property investors and investors overseas. This market will continue to grow in the future making it one of the best UK property investment opportunities around.
In 2010 when the financial crisis was taking hold the student rental market was the only sector of the market that remained unaffected. It is a resilient sector because no matter how big of an economic mess the country is in there are still students who need to rent.
The construction intelligence company, Barbour ABI, conducted a survey about construction contract values and the sectors where the most building work was taking place. In the first 6 months of 2017 there were more contracts awarded to build student accommodation than local authority housing, care homes, sheltered housing and housing associations combined.
Many developers have made significant profits through the construction of student accommodation and then selling blocks to investment funds. It was not uncommon for these developers to make profits of up to £60,000 per room.
As Student numbers increase so do the Opportunities
As a UK property investor you need to embrace the fact that more and more students are opting for higher education. Between 1999 and 2012 the number of students in higher education has increased by 46%. This is a 540,000 increase in student numbers according to a report by HESA.
A number of the students are from the UK and Europe, but there has also been an increase in the numbers of people from farther afield that want to study in the UK. In the last 5 years there has been an 8.5% growth in the number of students coming to the UK from the Far East for example.
Where are the Best Opportunities in the UK Student Rental Market?
It appears that the North of England offers the best opportunities. This is because property prices are growing and the yields are the highest. The city of Liverpool has a very large student population and there are almost 67,000 new students coming to the city every year.
Fairly near to Liverpool is Sheffield which has two of the biggest universities in the country. Only a third of the students in Sheffield are able to land university accommodation so the rest have to turn to the private rental sector. There are a lot of international students in Sheffield and growth rates of 15-20% are expected over the next 5 years.
Manchester is another student rental market hotspot. It is the UK’s fastest growing city and the rental yields average are double that of London on average. The numbers of students in Manchester is in six figures, and there is a lot of demand from international students who do not want to pay higher rents in the capital.
The important Success Factors with Student Rental Market investment
You will need to do your homework when it comes to sourcing the right properties to purchase that have student rental potential. But it doesn’t end there. If you aim to develop a portfolio in the student rental market (we recommend that you do this) then managing this effectively is essential.
There are many issues that you need to be prepared for in this market. Being a landlord in the student rental market is not easy because you have to deal with the different lifestyles that a lot of students lead as well as things like term time lodging dates. Despite this the student rental market offers one of the best opportunities in UK property investment.