Starting a real estate investment journey is a calculated decision, and the UK student housing industry in particular presents a strong potential for individuals sizing up the profitable UK real estate market. The demand for student housing is still strong, as evidenced by the fact that there were more than 2.6 million students enrolled in the UK during the last academic year, and that number is rising. Despite concerns about how Brexit may affect things, the student housing sector is still doing well and offers investors a bright future.
Driven by the steady influx of students eager to enjoy university life, the student housing market has demonstrated its durability in the middle of a global pandemic. In addition to the academic prospects, students' aspirations to live away from their families also contribute to the demand for student housing. A startling 88% of students will choose to live in purpose-built student accommodation in 2021 over continuing in their family homes, according to the National Student Accommodation Survey.
This in-depth analysis seeks to provide novice investors with the information they need to make informed and ethical decisions that maintain the standard of living for the student population while also ensuring profitability. Let's explore the secrets of success in the exciting world of investing in student housing.
1. Strategic Location Selection: Place the location above the property's condition when venturing into the student housing market. To determine places with a high student population and a shortage of available housing, a thorough study is necessary. Possibilities are often found in northern towns and cities with less competition and high demand, as some areas of London may be oversaturated. Select a site with amenities like stores, eateries, and gathering areas that is close to the town centre and university.
2. Modernise Your Investment: Demolish the stereotype that student housing is simple and inexpensive. Students today are prepared to spend a little bit extra for comfort and contemporary conveniences. Purchase a home with a modern kitchen and bathroom to attract potential renters. Good utilities lower long-term maintenance expenses while also improving the property's appearance.
3. Handle Financial Difficulties: Getting a mortgage for a student rental might be difficult because not all lenders are interested in homes rented to students. Should you want to live in specially designed student housing, be ready to pay for it using loans or cash, as conventional mortgages might not be eligible.
4. Long-Term Investment Mindset: Investing in student real estate can result in large profits, even though short-term gains might not be spectacular. If there is a steady market for student housing, investors might anticipate a return of about 10%. As this investment usually develops over the medium to long term, patience is essential.
5. Furnishing Aspects: It is more desirable for student housing to be completely furnished. Since most students don't own any furniture, a completely furnished home would be more desirable. Although purchasing furniture doesn't have to be expensive, take into account sturdy and low-maintenance solutions. Provide furnishings such as couches, desks, mattresses, and appliances to draw in good tenants.
6. Understand the HMO Rules: When making an investment in student rentals, a lot of landlords choose to use Houses of Multiple Occupancy (HMOs). Recognise the regulations pertaining to HMOs, as properties housing three or more unrelated tenants must have a licence. Ensure that your property meets the required standards, as the demand for traditional HMOs is being impacted by the availability of high-quality purpose-built student housing.
7. Investigate the Student Housing Market: Learn everything there is to know about the demand, popular neighbourhoods, and rent prices in the student housing market. Without overcharging, match your product to the demands of the market and the financial limitations of students.
8. Best Site Selection: Pick a property near schools, stores, and transportation hubs. Make sure the neighbourhood is well-known, safe, and contains amenities that are appropriate for students.
9. Fair Rent Pricing: Establish reasonable yet competitive rent rates. Rents that are reasonable draw in more students, which lessens the possibility of unoccupied periods. Maintaining equilibrium is essential for sustained financial success.
10. Maintain Sturdy Interiors: For longer-lasting usage, use sturdy, low-maintenance materials. Take on a modern, uncomplicated aesthetic to save expenses in the long run and make the property more appealing.
11. Maintenance: Conduct routine maintenance and inspections to ensure timely repairs are made. To keep the property in good condition, stop small problems from growing into bigger ones.
12. Clearly Stated Tenancy agreements: Ensure that tenancy agreements clearly state the expectations for renters in terms of upkeep. Provide instructions on how to report requests for maintenance, damages, and standards of cleanliness.
13.Develop Tenant Relationships: To promote good maintenance of the property, develop a courteous, business-like relationship with tenants. Lengthier tenancy periods may result from your responsiveness to their wants.
14. Security Deposits and Guarantors: Provide enough cash on hand to cover any unforeseen losses. For student tenants, think about requesting guarantors for additional financial assurance.
15. Inclusive Bills Offer: Make things easier for students by bundling internet and utility costs into the rent. Tenants will find the property more enticing, and their financial burden will lessen as a result.
16. Fair Wear and Tear Policy: Create a fair policy that makes a distinction between normal wear and tear and real harm. Make it clear what happens to tenants when they go out.
17. Ensure Appropriate Heating and Insulation: Give the property's heating and insulation top priority. This feature attracts students and reduces energy waste, helping them save money on bills.
18. Encourage Long-Term Tenancies: To reduce turnover and void times, persuade students to sign longer leases. Retaining a steady stream of rental income is essential to the property's overall market success.
To sum up,
Investing in student housing as a first-time investor presents a great deal of opportunity for both financial gain and the supply of high-quality living quarters. Strategic location selection, modernising investments, comprehending funding constraints, and embracing a long-term attitude are essential for managing this dynamic environment. For long-term profitability, tenant relations, understanding HMO regulations, and furnishing concerns are essential. Investors may fully realise the potential of student housing by keeping up with market trends, establishing reasonable rentals, and maintaining aesthetically pleasing interiors. Taking heed of these suggestions, in addition to advocating for inclusive bills and fostering long-term leases, ensures a successful entry into the exciting realm of student housing investing.
Citations:
Sms. “A First Time Investor’s Guide to Student Property.” Search Mortgage Solutions, 7 Oct. 2021.
Besmove. “UK Property Market: A Comprehensive Guide for Investors | Property Inventory Software - Fixed Pro.” Property Inventory Software, 26 Nov. 2023.
Admin. “Everything You Need to Know About Investing in a Student Let - Citylets Blog.” Citylets Blog, 21 June 2022.
Norwood, By Graham. “Twelve Top Tips for Investing in Student Housing.” Property Investor Today.
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If you want to learn more about what we offer students or what else you can do in New South Wales, get in touch by either using our online contact form or give us a ring at +61 2 9167 9356.
