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Investing in Student property and the best areas to invest

Written by Posted On Wednesday, 07 September 2016 11:34

For any investor, purchasing property in a student town is always a solid option. The demand is high with each academic year and student numbers are at an all-time high.

Landlords have to consider every aspect of the rental market when it comes to student property because it is more than just student numbers. London as an example has thousands of students all studying in the city yet the yields are a lot lower than other areas in the country.

Yields can differ considerably in different areas and this is mainly down to local housing policies. If towns and cities have been freely granting planning for student accommodation then it is likely that the number of properties available is high and this will affect the rental yields.

In those areas where student accommodation is supplied at a lower level, it is possible that tenants can be found easily which will mean yields are higher.

It is vital that investors look at the rental yields in potential areas of investment to ensure that they get the best return. However, once the area has been chosen there are several things that should be considered.

Investors should look at property that has a minimum of three bedrooms and at least two bathrooms. This is because students tend to rent in groups and this will make the property more desirable.

Students like to be located as close to the university as possible and this means that location is key. However, it is not just the university they want access to because they will want access to shops, bars, restaurants and public transport.

To ensure that the rent is paid, requesting a guarantor for each student will enable you to retrieve the rental payment from the guarantor should the payment amount not be met by the student.

Opting to use a joint tenancy will provide protection should a tenant leave during the agreed rental term as it will mean that the rent is covered by the other tenants while the room remains unoccupied.

To target students directly, a number of universities have directories of private student accommodation. There are standards that have to meet in order to be added to the directory but once in the directory, it will make your property accessible by students.

Where are the best areas to invest?

Sunderland is top of the list for student property investment. Property is priced low and investors are likely to see rental yields of 6.5%. The average price of property in Sunderland is £90,000.

Manchester follows closely with an average return of 6.2% and demand here is high as a result of being the home of three highly rated universities. This has given it a high student population of 90,000 while property prices are relatively low selling for an average price of £135,000.

When it comes to university status, Cambridge is at the top and that cannot be argued, however, investors are likely to see a better return on their investment in Oxford. The average rental return here is 3.9% which is higher than the 3.6% seen in Cambridge.


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