What are the benefits of investing in Purpose-Built Student Accommodation?

August 28, 2024

Purpose-Built Student Accommodation (PBSA) is one of the fastest growing UK property investment markets. What was once a new product competing with traditional university halls of residence has become the number one choice for the majority of students.

That market dominance and its appeal for both domestic and international students makes PBSA a great choice for any investor. Read on to learn about why you should invest in student property.‍

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Guaranteed pool of tenants: Investment security

One of the most important benefits is that you have a guaranteed pool of tenants which is replenished each year.

Data from the Higher Education Statistics Agency (HESA) shows that there was a record 2.8m students in the UK last year. By 2035, the UK’s admission regulatory body UCAS estimates that there will be an additional 358,000 students each year.

Of those, more than 25% are international students who are highly likely to pay a premium for top quality accommodation close to the campus. These are highly desirable tenants often unavailable to residential investors.

They will also sign up for the whole academic year and you don’t have to worry about them moving out in six months. This makes student property a secure investment as there is no danger of a tenant leaving halfway through their term.

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Shortage of available beds: High rents, low void periods

There is simply not enough accommodation available for all these students. This fact means investing in student accommodation removes one of the key risks of residential property investment – void periods.

Too many students means more competition for places, and that means higher rents can be charged for the luxury PBSA apartments which are in such high demand.

For example, 20,000 students attend the University of Huddersfield each year. They make up one in seven of the town’s population and the University’s own halls of residence can only accommodate 1,300 of them.

This leaves a shortfall of more than 18,000 students that need to be accommodated elsewhere. PBSA developments in Huddersfield like Vision are therefore oversubscribed and enjoy extremely high and reliable occupancy levels year after year.

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Lower price points: More affordable, higher yields, fewer costs

Investing in student property is generally much more affordable than buying residential property. The barrier to entry is much lower, making this a much more accessible prospect. That comes with two major benefits.

Firstly, low prices and relatively high rents mean that your rental yield generally be much higher than if you invest solely in residential property. That means bigger profits and a faster return on investment.

Secondly, the purchase price of a student property comes in under the minimum value for Stamp Duty Land Tax in almost all cases. That saves you a big expense when compared to investing in residential property which often comes with that extra charge.

A great example of this is Axiom, a new luxury student apartment development in one of the UK’s busiest markets – Stoke-on-Trent. A great city centre location within walking distance of Staffordshire University and high levels of amenity make this an extremely desirable home for student tenants. Prices from £79,999 also make it affordable for any investor, and there’s even a 10% NET guarantee for three years.

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Hassle-free investment: Everything managed for you

It is standard practice in the PBSA sector for everything to be taken care of on behalf of the investor. Unlike residential property investment, choosing PBSA means that you don’t have to worry about finding tenants, conducting viewings or furnishing the property.

All of that is taken care of by a management agent who will also handle repairs, maintenance, building management, marketing, administration and everything else involved with a tenancy, so you don’t have to.

This makes it a hassle-free experience and a truly hands-off investment option. This is a big factor in the appeal of student accommodation for all types of investors. If you are investing from abroad, or on the side of full time employment that would leave you with little time for property management, student accommodation investment might be perfect for you.

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Stable investment: Not subject to market fluctuations

None of the challenges faced by the residential property market in the last two years affected PBSA investors. No matter what ups and downs the property market faces, people still go to university and they still need accommodation.

That makes investing in student property ideal for any investor who considers stability and predictability to be their number one priority. It also means that student property is a great way to diversify an existing residential portfolio and spread your risk more effectively.

Looking for student property for sale? Or want to find out where the best student property markets are? Get in touch with our team today to learn more about the sector and start your PBSA investment journey.

What are the benefits of investing in Purpose-Built Student Accommodation?

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