Want to find out more about investing in student property? Please browse our list of the most Frequently Asked Questions about student property investment.
A. The student property market has risen to prominence over recent years, with many investors looking to add student property to their portfolio. Over the last 10 years, the market has become very lucrative and has seen billions of pounds worth of investment. Even during the country’s financial crisis, the student housing market continued to boom and became a very reliable asset within an investor’s portfolio.
There are more and more students going to universities in the UK each year, adding to the constant need for off-campus housing for students. The combination of a need for more student accommodation and an increasing number of students year on year makes the student property market perfect to invest in, particularly with the high returns that it can achieve.
A. Despite mortgages being available for student housing, they are much more limited than buy-to-let investments. The loans may be available to investors, although there isn’t much choice between them and they may require much higher deposits. A mortgage may come with certain requirements, especially as providers typically only offer mortgages for Houses of Multiple Occupation that have up to five tenants, and the tenants shall not be related to the investor.
A. There are four typical forms of student housing accommodation, including standard student pods that resemble university halls, student pods with an ensuite, luxury student apartments and also single rooms to rent within a House of Multiple Occupation. Each type of property can be invested in at different price points, and each property type can expect to achieve different rental yields when compared to each other.
A. Often referred to as PBSA, Purpose Built Student Accommodation is specifically designed and constructed for the use and occupancy of university students. The maintenance and marketing of these particular properties are taken care of by management companies, providing a hands-off form of student property investment.
A. Despite both forms of investment being great opportunities to achieve lucrative returns, student accommodation is a continuously growing market and therefore provides many more opportunities. With numbers of students increasing every year, there will always be a need for student housing, especially with the current lack of supply when compared to the demand.
When finding tenants for a student property, the students often need to have a guarantor in order to complete the process, and so that provides increased stability to the investor as they will have the confidence that their rental income is assured. If it's the right type of property and located in the right area, it will be able to achieve bigger rental returns. Also, purpose built student accommodation typically has onsite management and modern facilities, providing a better home for students.
A. Investing in student housing can be a good alternative when compared to residential buy-to-let as the initial investment can often be cheaper than that of a residential development. Also, because of lower availability and yet still high demand for student housing, investors and property owners can typically achieve higher rental yields.
A. Stamp Duty does apply to student housing, although following the 2016 budget announcements, it is no longer in line with that of buy-to-let properties. The responsibilities have been lowered for non-residential properties, including purpose built student accommodation, based on the housing shortage within the UK.
A. The rental returns made from a property are often paid quarterly, with the payment being automatic. After providing their bank details, investors can expect a payment to be made on the relevant date, with funds going directly into their account.
A. As long as the property will still continue to be occupied by students, student property accommodation can be resold.
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