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A guide to investing in Student Property

The student property market is a big aspect of the property investment sector, with residential property and purpose-built student accommodation both providing great opportunities to invest in student property.

In recent years, student accommodation investment has become one of the leading asset classes amongst many wealthy investors. With UK student numbers growing year on year and developers seeking to catch up with an undersupplied market, student property is the perfect market to cast the investment net over.

Student Property as an Investment

Investors from all around the world are looking to invest into student housing property, particularly based on the combination of high yields and a strong market. After research was undertaken by property specialist Savills, it has been revealed that £4.3 billion was invested into student units, with institutions investing in a total of 51,150 units.

As the numbers of students at universities across the UK increases year on year, the need for housing increases too. Students of all ages, both domestically and from overseas, are constantly look for new housing opportunities and so the target market to occupy a property is largely varied. Student property can often achieve up to £650 per week as rent which, compared to relatively low prices for purchasing the property, proves to be a favourable purchase for investors.

When deciding whether to invest in student accommodation, the location, type of tenant and potential rental yields need to be considered before any decisions can be made. It is important to consider what students will be looking for within the chosen location, and offer them the best accommodation option at a great price. Standing out from other investors by offering great location, accommodation and price will enhance the reputation of the investor and help to provide them with tenants all year round.

Ways to Invest in Student Property

Making a mark on the student property market can be done through various different methods, with the most popular being through purchasing a property and renting it out via a buy-to-let mortgage. For purpose built student property, it is expected that the investor will buy off-plan by providing a non-refundable deposit and half of the cost on exchange of the contracts, with the remainder of the fee set to be paid on completion.

Despite knowing the fixed price of the property, investors are opened up to risks of non-completion and also financial troubles for the developer. Although the investor will never be able to foresee these risks becoming a reality, it is advised that research is made into the developers before any commitments are made.

An alternative route to take would be to buy shares in a student property with income made in proportion to the shares held by the investor. This method is often used by investors that may not be able to afford to purchase a property in full, but are looking to get into the student property market.

Off-Campus Housing Opportunities

Many students now prefer to reside off-campus, highlighting the need for potential investors to set their focus on alternative accommodation that students will look at when going to university. Off-campus housing can prove very lucrative for investors over a longer period of time, with numbers of students constantly increasing and the idea of living off-campus becoming more and more appealing as years go by.

An increase in overseas students at universities around the UK is a contributing factor to the increased interest in off-campus living, especially as the students often want to see more of the city during their time there. Having off-campus accommodation can make city exploring much easier, with many hoping that it will enhance their overseas university experience. Having off-campus accommodation is typically a cheaper option for students, and so it is likely that there will be tenants occupying the property for the majority of the year.

Selling Student Property

As is the case with all types of property investment, the investor needs to consider the potential for resale. When purchasing purpose-built student property, a company may have certain restrictions that could apply to the resale of the property to the open market, although these restrictions would not prevent the sale of the property to a like for like investor.

Not only is it essential to thoroughly research into all aspects of purchasing the student accommodation, including location, property type, rental yields and what returns can be expected, but it is also very important to extensively research terms regarding the investment and resale opportunities. This will ensure that the investor won't get stuck with an investment and can exit at a suitable point without any issues.

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