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Student Property Investment
Investing in student property can be an excellent strategy for both new and experienced investors alike. With student accommodation typically offering a unique set of benefits not seen in other asset classes, a student property investment company can guide you through this process and ensure you’re on the right track with your investment strategy.
On this page, we’ll look at the ‘what’, ‘why’, and ‘where’ of investing in student accommodation. Plus, if you’re ready to get started, we’ll show you the latest opportunities from our portfolio.
Editors Note: This guide was last checked and updated in November 2023.
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What Is Student Property Investment?
Student property investment is a rapidly growing strategy in the UK property market, with the approach becoming a staple choice among experienced investors. As the name suggests, student property investment involves purchasing a property with the intention of leasing it to university students.
Given the world-class educational institutions in the UK, student numbers continue to increase across the 160+ universities in the country. However, despite a swelling student population, there is a fundamental under-supply of suitable accommodation – creating an exceptional investment opportunity for investors.
As a result, student investment property typically achieves high rental yields and few void periods – especially from properties located in prime cities, particularly those with prestigious Russell Group universities, where the demand for accommodation is highest.
There are two main types of student property available to investors:
- Houses of Multiple Occupancy (HMOs): HMOs are the most common living arrangements for students, especially in their second and third years, where they often move out of university halls of residence. HMOs are essentially shared living spaces where each student has their own bedroom but shares common areas, such as the kitchen and living room.
- Purpose-Built Student Accommodation (PBSA): PBSA is built specifically for student residents, offering a more managed and structured living environment. PBSAs have significantly transformed the student property market, making it one of the fastest-growing sectors in the UK property market.
Why Should I Consider Student Property Investment?
No Stamp Duty
Higher & Longer Fixed Rent
Fully Managed Structure
Strong Tenant Demand
You will find that in most university cities across the UK, there is a critical shortage of student accommodation, this is driven by four of the world’s top ten educational institutions being based in the UK. Many universities have just a couple of thousand dedicated halls of residence rooms, with the remaining students having to go into the residential market, mostly house-shares (HMOs).
However, modern students, often from overseas, want secure, high-quality accommodation which is convenient in terms of location and the inclusive rental package. This is exactly what purpose-built accommodation offers.
Luxury Facilities
Student Accommodation For Sale
Where To Purchase Student Property?
When assessing locations to buy student accommodation it’s important to take the view of a prospective tenant. As long as the city itself has significant student numbers, proven demand and high student satisfaction rates it is likely the long-term prospects will be promising.
This makes cities such as Sheffield, Liverpool, Cardiff, Leeds, Manchester and Nottingham not just fantastic university cities, but prime locations for student property investment.
Nonetheless, keep in mind that it’s just as important to consider the specific development in terms of its facilities, pricing and competition in the local area. Read below for our guide to the best areas for student property investment in the UK.
6 Best Places For Student Property Investment In The UK
Birmingham
House price forecast: +19.5% by 2025
Rental value forecast: +12% by 2025
Birmingham is home to five universities. The most popular are the University of Birmingham, Birmingham City University, and Aston University.
Between the three there are over 75,000 enrolled students – meaning the city represents one of the UK’s major higher education hubs.
Leeds
House price forecast: +13.5% by 2025
Rental value forecast: +10% by 2025
There are four universities in Leeds, with over 65,000 students between them.
The biggest, The University of Leeds, is part of the Russell Group – a collection of universities across the UK with a reputation for world-class research and education facilities.
Liverpool
House price forecast: +14.5% by 2025
Rental value forecast: +10% by 2025
Liverpool holds an enviable reputation as one of the UK’s best student experiences.
Home to two major universities, Liverpool John Moores and The University of Liverpool, there are over 55,000 students spread across the city.
Manchester
House price forecast: +18.5% by 2025
Rental value forecast: +12% by 2025
Home to world-class research facilities, two famous universities, a long history of innovation, and over 70,000 students, Manchester is truly one of the stars of the UK’s higher education system.
Both domestic and international students head to Manchester for its stellar reputation as a place to both study and live.
Sheffield
House price forecast: +12.5% by 2025
Average rental yield: 5.23%
With over 60,000 student split between The University of Sheffield and Sheffield Hallam University, it’s fair to say the city of Sheffield is brimming with student life.
This is another of the UK’s most popular higher education choices, owing to a fantastic, renowned student experience in a young, fun and creative city.
London
House price forecast: +19% by 2025
Rental value forecast: +11% by 2025
With over 40 institutes of higher education, including world-famous and highly prestigious universities such as the London School of Economics and King’s College London, the capital attracts a student population of over 400,000 people.
With the demand for student accommodation so high it is worth considering investing in student property in London if the high average property prices are not too much of an obstacle.
What Do The Experts Say?
Student Demand
The current demand for accommodation is stimulated by both a slowed supply of properties due in part to Covid-19 and a rapidly growing student population. The five fastest growing universities have increased full-time student numbers by 53% over the past year, whilst student numbers in total reached a record 2.2 million (Cushman & Wakefield, UK Student Accommodation Report 2022-23) – resulting in a student-to-bed ratio of 2.39:1.
Furthermore, international student numbers have continued to rise. In 2019, the government set a target of 600,000 international students by 2030. It achieved that target nearly a decade earlier than expected, with HESA reporting nearly 680,000 international students for the academic year 2021-2022.
Finally, in 2019, JLL forecast a further 500,000 full-time UK students by 2030 (UK Student Housing Report 2019).
Profitable Investment
Investing in student property is popular because it can be a highly profitable venture. Impacted by the effects of Covid-19, the cost of new university owned accommodation has risen by 17% from the previous year, compared to just 11% for an equivalent private sector student property. This has resulted in an overall difference between in price between a university owned en-suite and a private sector en-suite room of just 0.3% (Cushman & Wakefield, UK Student Accommodation Report 2020-21).
The average price for a private en-suite room annually was £6,431, and £7,643 for a new en-suite room. Despite these costs being higher than university owned accommodation (although only by 0.3% for pre-existing rooms), 84% of students indicated that their accommodation costs were affordable or just about affordable (Knight & Frank Student Accommodation survey 2021). Additionally some of the best performing housing markets over the past 7 years have grown at a rate twice that of inflation (Cushman & Wakefield, UK Student Accommodation Report 2020-21).
Student Satisfaction
The Knight & Frank Student Property Report for 2023 highlights that across the country, levels of satisfaction with accommodation are high.
Over 80% of students in privately-owned, purpose-built accommodation would recommend it to peers, compared to 74% of those in a houseshare. Either way, both score well, although there are concerns over the rising cost-of-living.
Frequently Asked Questions
Is the fixed rent still paid if the property is unoccupied?
Who will look after the property for me?
What happens after the fixed rent period?
What are the additional costs?
Can I use a mortgage to buy the property?
Are there payment plans available?
What’s the exit strategy? How do I sell my property?
Selling your student property is very simple, we can assist with recommended companies to market your property for sale or you can use a traditional high street agent.
The student property market is more niche compared to traditional residential property as you will be focusing on investor buyers but there tends to be significant demand for properties that perform well in terms of net income and that have a track record of high occupancy rates and rents being achieved
What Does Nick, Our Founder, Think?
“Student accommodation investment continues to grow in popularity. We receive a steady stream of enquiries from both domestic and international prospective investors.
With a relatively soft market over the past few years due to Brexit and COVID-19, security and deploying capital into assets that provide a reliable and consistent income is paramount. Student accommodation (which we call PBSA in the industry) gives investors a long-term net yield at a rate which is typically difficult to achieve in the traditional residential market.
Add this to the fully managed structure, low-entry level prices and limited additional costs and you can see why both institutions and everyday investors turn to student property to diversify their portfolio”.
Nick Hyland, Director
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