Here we'll answer your Frequently Asked Questions (FAQ's) about student accommodation
1. Why invest in Student Accommodation?
Student Accommodation is a relatively young asset class that has experienced a massive upsurge in popularity among investors in recent years. Within the time span of as little as 10 years this sector has exploded into a lucrative market which according to property advice service CBRE saw an investment of over £2.4billion in 2014 alone.
Even during the financial crisis 2007/08, when most other asset classes decreased in value, the student housing market remained strong, creating a reliable income stream for investors. An ever-growing number of both domestic and international students ensure a constant demand for student housing, which can’t be met by just universities alone. High demand, low supply and exceptionally high gross returns of up to 10-15%, make the student accommodation market a sustainable and lucrative investment opportunity for savvy investors.
2. What are the advantages of student accommodation vs residential buy-to-let?
Both residential buy-to-let and student accommodation are viable and lucrative investment opportunities. Student housing however benefits massively from the fact that Britain’s student body continually increases. This ensures that demand in university cities and towns remains stable, meaning that void periods are kept to a minimum.
In order to get a lease, students are generally required to provide a guarantor, which ensures that all rent is paid in full and on time. However, the main advantage of student buy-to-let is the expected return on investment, providing the right location and type of accommodation has been chosen.
3. Is student accommodation more expensive than residential buy-to-let?
No. In fact, due to its nature student accommodation tends to be a lot cheaper than residential developments. Additionally, because of the high demand and low availability of stock, yields from student buy-to-let projects are likely to be higher, too.
4. Can I get a mortgage for student accommodation investment?
Whilst there are mortgages available for student accommodation investments, they are generally more limited compared to residential buy-to-let investments. Often loan providers only give mortgages to smaller Houses of Multiple Occupation (HMOs) of up to five tenants, if at all, and do not allow for relatives of the investor to occupy the premises. Generally speaking, whilst there are loans available, the choice is small, often requiring a higher deposit than for residential buy-to-let properties.
5. Can I resell my student accommodation investment?
Yes, you can resell your student accommodation investment, provided that it will continue to be tenanted by students only. Knight Knox operates Student Podshop, a website dedicated to reselling student accommodation investments: www.studentpodshop.com
6. What are the different types of student accommodation?
Student accommodation generally comes in three forms: student pods (simple bedrooms similar to university halls), pods with an en-suites and more luxurious studio apartments. Alternatively there are also student rooms available for investments in private HMOs.
7. What is purpose built student accommodation?
Purpose Built Student Accommodation (PBSA) is accommodation that has been built specifically to house students.