Student Accommodation
Featured Properties in Student Accommodation
Take a look at some of our current opportunities within the student property sector.
The simplicity of Purpose Built Student Accommodation investments is one of the reasons why the sector has moved into the mainstream.
Purpose Built Student Accommodation (PBSA) is typically a large-scale development designed specifically for university students and post-graduates.
Although each project will vary, PBSA often features self-contained studios or en-suite rooms arranged in clusters and a selection of onsite facilities, including a laundry room, communal living and working spaces, a gym, a cinema room, and outdoor places to hang out.
PBSA is one of the most popular ways to invest in student accommodation, allowing investors to purchase units within a fully-managed development and achieve a passive rental income.
Much like a traditional Buy-to-Let property investment, invest in a unit on a leasehold basis and will typically secure an assured rental income for a pre-determined period.
Due to the lower entry level of this asset class, student accommodation allows investors to secure significantly higher rental returns than the average residential property.
Alongside rental assurances, a lower (sometimes zero per cent) Stamp Duty obligation is payable. The fully managed aspect of the opportunity is ideal for international investors who want to build a robust portfolio.
PBSA is ideal for investors who want a contractually assured ROI on their investment during continual change.
Why invest in Student Accommodation?
The simplicity of Purpose Built Student Accommodation investments is one of the reasons why the sector has moved into the mainstream.
Purpose Built Student Accommodation (PBSA) is typically a large-scale development designed specifically for university students and post-graduates.
Although each project will vary, PBSA often features self-contained studios or en-suite rooms arranged in clusters and a selection of onsite facilities, including a laundry room, communal living and working spaces, gym, cinema room, and outdoor places to hang out.
PBSA is one of the most popular ways to invest in student accommodation, allowing investors to purchase units within a fully-managed development and achieve a passive rental income.
Much like a traditional Buy-to-Let property investment, invest in a unit on a leasehold basis and will typically secure an assured rental income for a pre-determined period.
Due to the lower entry level of this asset class, student accommodation allows investors to secure significantly higher rental returns than the average residential property.
Alongside rental assurances, a lower (sometimes zero per cent) Stamp Duty obligation is payable. The fully managed aspect of the opportunity is ideal for international investors who want to build a robust portfolio.
PBSA is ideal for investors who want a contractually assured ROI on their investment during continual change.
An Ever-Popular Asset Class
Student property has been growing in popularity over the last decade, with more and more investors putting their money into the sector, propelling it into the mainstream.
According to Knight Frank, investors spent £4.42 billion in the UK’s student property sector in 2021, elevating the value of the market segment to £72 billion.
For investors, the lower entry level of the PSBA market is one of its biggest draws, with investment starting as little as £70,000 for a fully furnished, new-build room purchased on a long leasehold basis.
A lower rate (in some cases zero per cent) of Stamp Duty is also payable on PBSA, making the upfront cost of entering the market segment significantly lower for Buy-to-Let investors.
As the sector has matured, a second-hand market has emerged. However, investors tend to hold onto assets long-term to take advantage of rental assurances provided by the developer.
PBSA is now a highly desirable and income-producing option for portfolio diversification. Typically a cash investment, PBSA is an excellent option for those who want to beat inflation and make their money work harder for them by securing a regular passive income – rather than holding funds within a savings account.
Current value (GBP) of the UK student property segment (Knight Frank)
Amount (GBP) invested in the UK student property sector in 2021 (Knight Frank)
The increase in UCAS applications in 2022 when compared to 2020 (UCAS)
A Recession-Proof Property Investment?
Whilst past performance and trends aren’t guaranteed predictors of future performance, there are certain events and trends that seem set to repeat in tandem with one another. One such correlation is between economic uncertainty and an increase in university applications.
Over the last 25 years, we have seen a consistent upward trend of university applications with this incline becoming even steeper after the removal of caps imposed by the government on enrolment numbers in 2016. This coupled with the UK’s popularity with international students as an English-speaking country with a world-renowned education system these numbers look set to continue increasing.
With the cost of a university degree not cheap, the popularity of a British education is only exacerbated when the GBP is much cheaper than the USD, with the United States being UK’s closest rival when it comes to attracting international students -another trend that looks set to continue given the pound’s recent weakness against the dollar.
To add the increasing student numbers, the rising interest rates mean that there are more likely to be more people looking to rent across the UK in general putting even more strain on, what is already, a rental sector struggling to offer enough supply to keep up with demand. Whilst the housing stock tends to differ between typical renters and students, there is obviously lots of cross-over with the cost of student rents likely to follow any increases across the broader rental market.
The year-on-year increase in student numbers since the 2019/20 academic year – 5.7% higher than after the 2007/8 financial crisis
Average increase in student numbers of the ten fastest-growing universities from 2015/16 to 2020/21
Growth over the last five years of international students attending the ‘bottom 25’ universities (Cushman & Wakefield)
Over 2.2 Million reasons to invest?
There are now a record 2.2 million full-time students enrolled at UK universities, marking a new record for higher education demand. In addition, compared to five years ago, more students are studying away from home than ever before (+221,990), meaning the need for PBSA has increased.
A report from Cushman & Wakefield estimates that 1.63 million students now require a bed space throughout their university experience. Moreover, this figure will likely rise as visa issuances for international students rise due to a post-pandemic recovery and a government change to post-graduate work visas.
During economic uncertainty, enrolment in university courses often surges as more people retrain or return to education to improve their job prospects. This trend could see a rise in domestic student intake and therefore increase demand for student-centric housing.
The evergreen nature of the sector means that this market segment is not affected by outside factors, as each academic year brings a renewed pool of tenants that require housing.
University cities with high graduate retention rates often see the highest demand for PBSA and dual-purpose developments, as young professionals opt to stay within co-living spaces rather than enter the residential rental sector.
Overseas students are one of the largest demographics for this form of accommodation. New-build developments that feature desirable onsite facilities appeal to the students themselves, while the security of a management team and 24/7 CCTV comforts parents with children studying abroad.
Students who require a bed space in the UK (Cushman & Wakefield)
Number of full-time students studying at UK universities (ONS)
Additional number of students studying away from home compared to five years ago (Cushman & Wakefield)
Key cities of interest.
With UK student property an ever-popular investment choice with investors globally, there are plenty of locations to consider.
Combining low-entry levels with high yields, here are a few key locations to keep your eye on when looking for that perfect student property investment.
Download your FREE UK 2022 Buy-To-Let Property Guide.
After starting positively with the worst of COVID looking like it is behind us, 2022 has certainly managed to throw up a number of surprises for investors everywhere. However, it is not all doom and gloom.
In this guide, we drill down into how the market has fared for investors so far, and where it looks to be heading.
We are here to help you navigate the market with our consultative, informed and, above all, totally impartial approach.
For an informed overview of what is currently happening in the UK property market feel free to download our UK Buy-to-Let 2022 Guide here.
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By submitting your details via this online form you agree to be contacted via email/phone/SMS by Mobibi Invest in relation to its property investment brands. We do not share your personal details with third parties.
For further information, please see our Terms of Use.