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Student property vs residential buy-to-let - what are the differences when it comes to investing?

Published: 4 April 2019

Student property vs residential buy-to-let - what are the differences when it comes to investing?

University is at least as much about gaining life experience (including making new friends) as it is about earning a degree. That being, so many students choose to spend at least their first year in purpose-built student accommodation.

Some may then move on private residential lettings, while others may stay in their halls for the entire duration of their studies. The high demand for purpose-built student accommodation creates an exciting opportunity for property investors; however, investors should be aware that there are differences between investing in the PBSA market and investing in standard residential buy-to-let.

PBSA is considered commercial property

Possibly the single, biggest difference between investing in PBSA and investing in residential buy-to-let is that the former is regarded as commercial property and therefore operates to a rather different set of rules, for example, it is exempt from the infamous second-property surcharge.

PBSA has a very specific target market

Even though those who invest in residential buy-to-let will buy property with a certain demographic in mind (which could be anything from students to families), it is highly unlikely that they will be able to target their marketing with the same degree of precision as investors in PBSA (or, more accurately, the management company working on their behalf). PBSA is almost invariable constructed in partnership with a specific university, which will have an excellent idea of how much accommodation is required and of what nature. The university will also be in a good position to offer guidance on the best locations for PBSA developments.

PBSA can combine long-term and short-term lettings

Admittedly, this is not unique to the PBSA niche; however, it is probably more common in it. While PBSA is, literally by definition, built with students in mind, it will not necessarily be let to students all year round. It is far from unusual for PBSA developments to be let out to students during the academic year and then let out on a short-term basis during the summer holidays. Depending on the location, the PBSA may host tourists, business people/conferences or a combination of both.

PBSA is invariably managed by a third-party company

While many residential buy-to-let properties are managed by lettings agents (especially in these days of right-to-rent), this is not mandatory and some landlords do manage their properties themselves, especially the more experienced. PBSA however essentially has to be managed by a third-party company since investors will typically buy units within a building, the fabric and general facilities of which need to be maintained. Using a single management company is really the only practical way of achieving this.

PBSA tends to be a very cost-effective way of investing

Not only do investors buy a “unit” in a building rather than a whole building, but they often have the option to buy units which are smaller than anything you could reasonably expect to find on the standard residential property market. For example, even these days, PBSA may include units which are bedrooms rather than studios, although these days they are likely to be en-suite.

If you would like to discuss any student property investment opportunities or are looking to sell your investment, feel free to call us on 0161 464 7530 or email us on enquiries@hopwoodhouse.com

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Hopwood House - Property Investment