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Are you considering student accommodation investment as your next commercial investment? Large student accommodation blocks are an attractive prospect, with units offering favourable rental returns and many offerings assured rent for a set initial period. But there are some important factors to consider – check out our top tips below.
There’s a fine line to tread between investing in a savvy purchase and spending so little money that you risk jeopardising your return. If you find an investment opportunity which is significantly cheaper than others you’ve seen, this will be a reason—so whilst it may seem cheap, it may not be good value.
Is the property in an undesirable area, or has it been built to lower specifications than others nearby? Students have a reputation for being prepared to live in lower quality accommodation—but whilst they might not mind sharing a slightly more characterful property with their friends in second years, large student accommodation blocks are generally inhabited by first year students or ‘freshers’, many of whom will be looking for comfortable accommodation to ease them in to living away from home.
In fact, the idea of students being prepared to live in substandard accommodation is rapidly becoming outdated as student demographics change. The other group of students who regularly choose to live in large accommodation blocks are foreign students, who are unable to come and check out the property before they move to the UK. As such, your property will need to look desirable in photos.
Furthermore, these students are usually prepared to pay for a good quality of life. Students who can afford to travel to the UK to study are unlikely to want to live in substandard accommodation.
Small ‘student pods’, which are non self-contained apartments, are not considered to be individual units and you cannot get a mortgage on this type of student accommodation investment. A self-contained student apartment, meanwhile, is mortgageable. Even if you are a cash buyer, if you choose to sell, this will limit your options as many buyers will not be able to purchase without finance.
The bricks and mortar of your investment aren’t the only important things to consider. If you’re considering student accommodation investment, you’ll need to carefully research the developers’ reputation—but also the team in place managing the property. For the developer, thoroughly research their other developments.