First time and regular property investors often face stark choices between different types and categories of investment and sometimes the differences are subtle but significant. Although property investment on the whole adheres to some constant rules and trends there are often significant benefits to a particular choice of investment in relation to your circumstances.
Both residential buy-to-let and student accommodation investments are viable and lucrative investment opportunities. However, student housing benefits from the fact that Britain’s student body is continually increasing. This ensures that demand in university cities and towns remains stable and void periods are kept to a minimum.
In order to get a lease, students are generally required to provide a guarantor, which ensures rent is paid on time and in full. On top of stable and guaranteed rents, a student buy-to-let investment is likely to offer high capital appreciation, providing the right location and type of accommodation has been chosen.
With students numbers on the rise, it is absolutely key for a university to have the ability to offer the best student experience for the best value. A good student experience relies heavily on excellent accommodation and for this universities are crying out for boutique living spaces within a comfortable distance. Old-style university halls simply do not cut it anymore and Purpose-Built Student Accommodation (PBSA) is where students are looking these days.
Demand for high quality PBSA increased significantly following the increase in university fees overseen by the Conservative government in 2012. As university became more expensive, students were understandably keen on finding the best possible value for money.
Subsequently, the PBSA investment sector has boomed with investors from around the world seeing its potential. Here are some example situations where an investor could benefit from choosing student accommodation over a traditional residential buy-to-let:
Limited or low capital
Investing in student accommodation generally involves a much smaller initial outlay than investing in a traditional residential buy-to-let property, and the deposit required is similarly small. Student accommodation can often be a good way for first-timers to test the waters and gain experience of the property investment market. Risk averse investors can also be confident that stringent checks are carried out on tenants as standard procedure by management companies.
Investors keen to diversify
Investors often like to maintain a varied and diverse portfolio in order to try and offset risks and fluctuations. Student accommodation investments offer ideal opportunities for this as they require lower investment sums allowing you to spread your funds across a greater number of properties.
If landlords looking to invest are reliant on acquiring finance, then lower overall investment amounts make perfect sense. Not only this, but banks are more likely to approve a buy-to-let mortgage with a history and proven record, which student accommodation provides through regular occupancy. As a package for commercial lenders, student accommodation can be said to be more attractive.
As with any property investment, PBSA carries risks - however, it can be said that the risks associated with this particular type are low. Yields tend to be high and consistent, capital appreciation is generated quickly, and void periods are low.