Remembering damp walls, draughty
According to Knight
Proving to be resilient throughout two of the toughest economic climates, Select Property described it as a ‘cyclical asset’, separate from both the commercial and the residential property markets.
The student market has a ‘low correlation’ with other potentially damaging economic factors; despite events like the general election and the rise in tuition fees (to £9,000 a year in 2012) enrolment at university is at a record high - with a reported 659,030 applicants at the start of this academic year.
Named as the UK’s best performing asset class, Select Property state that £3.3 million was invested in the first 3 months of 2015 alone.
NuWire Investor states that the UK's student scene has an international reputation. Calling it ‘a top performing asset class … with average yields well ahead of those in the traditional buy-to-let sector’ that has ‘attracted over £6 billion of investment in the past 3 years’.
When did it all start?
Since the Robbins Report commissioned by the British government in 1963, much has been done to address the growing need for adequate student housing.
Committed to growth in the higher education sector, the report addressed the increase in people living and studying away from
‘Consider the nature of some of the lodgings in which circumstances oblige students to live, the distances that they are forced to travel …, the lack of privacy - there are cases where three students share one study-bedroom … it can be said that the limit has already been passed.’
In turn, the report also pointed out the educational and social benefits of flying the nest. According to Property
What’s driving investment?
As the appeal of a British education accelerates globally there has been a significant rise in the number of UK and international students; driving an imbalance in the supply and demand of student property.
Knight Frank establish
Reporting year on year growth, Knight Frank's Student Property Index reveals that rental growth in the capital is up 1.73% from the previous year and regionally the rental growth is at a 1.55% average.
Options for investors:
House in Multiple Occupation (HMO)
One option for investors is to buy a House in Multiple
These properties are often family homes let on a room by room basis, comprising of shared facilities and meaning that the economies of scale work in favour for investors.
However all HMOs need a licence, and this varies depending on the councils and conditions required, and if landlords are found to be renting out HMOs without a licence, they can be fined up to £20,000.
Purpose built student accommodation (PBSA)
The demand for purpose-built student accommodation (PBSA) is at an all-time high. According to NuWire Investor, these ‘purpose-built pods offer a more affordable entry point for investors’ allowing them to invest in a single unit rather than purchasing a complete property with multiple rooms.
Despite being more affordable NuWire also state that they also offer a higher yield: ‘...sometimes by as much as 70%, making it ultimately the better choice in the current market.’
Changing demands
As the tuition fees have increased, students have started seeing the whole university experience with more of a
Knight Frank state that the reason for success in the PBSA sector is the higher quality, professionally managed accommodation, often inclusive of bills and sold as a well-rounded and ‘branded product’.
Keith White – managing director of CRM – largest UK student accommodation provider states that:
“Students are choosing their accommodation for reasons beyond just price. They are demanding
Investors can also gauge
To cater to the demand and the new luxury market the properties have to be in a central, desirable area resulting in more and more PBSAs appearing in iconic buildings and sought after locations (Nido and Urbanest to name a few).
Given its non-cyclical nature and thanks to the rising student numbers there is a continued high demand for student housing – and with the demand outweighing the