An investment in property is considered one of the safest investments in asset classes because of the longevity, demand and tangibility of a property. For this reason, many investors make a business out of property investment, building assets, portfolios and capital.
Student property comes under this general umbrella of property investment. Although it is a fairly new concept compared to vanilla buy-to-lets (and doesn't currently have a specific mortgage in the UK), it is still one of the fastest growing specialist commercial investments in the UK.
What Is Student Accommodation?
Student accommodation is a property specifically built for students to live in. It is also known as purpose-built student accommodation in investor language. The whole point of purpose-built student accommodation is to provide students with a convenient, luxurious, and affordable alternative to the university dorms on campus.
Is There A Demand For Purpose-Built Student Accommodation?
Universities in the UK take on thousands of students a year, in 2017 UCAS reported 564,190 applications to UK universities, and they can't provide housing for all of these students. Students are also moving away from the typical HMO property with small bedrooms, overpriced rents and shared kitchen and bathroom facilities. Purpose-built accommodation caters to those who are looking for a second home whilst still being close to the campus and the city's amenities. There are also a lot more overseas students choosing to study in the UK's world renowned universities that need housing. These foreign students are also more likely to spend a little more each month on rent for the high quality and standards of a PBSA.
Off-Plan Student Property Investment Benefits
Discounted buying price - Because the property is still under construction, it can be sold at a much lower price than if it was already an existing property. This comes in useful because although student accommodation isn't particularly known for it's high capital appreciation, you can still make a great profit from selling it on, as the price of the property once construction is completed will be higher than the price you bought it for. That is one of the main advantages of off-plan investments because investors often take the increased value into consideration when choosing to buy off-plan.
More time for planning - When you invest in off-plan, the completion date is often months after the exchange of contracts (depending on how quickly you decide to purchase the unit). This leaves you with a lot of thinking time to plan your investment. If you are choosing to hire your own management or manage the property yourself, you can plan it at this stage. You can also take into account the figures in terms of rental income per annum to see where your pfofits will stand in 5 years time.
First pick - Off-plan investors get the first pick! The sooner you reserve the property, get the funds sorted, and exchange the contracts, the more stress will be taken off your shoulders. You will then be left with months of time to think about how long you want to keep the property, what you are going to do with the residual income and how you are going to sell the property after the 3-5 year lease is up.
Developers cover management - Often times, the property will be managed by a professional property management company chosen by the developer. This gives you a fully managed, hands-free investment as well as a guaranteed rental income. The management costs such as repairs, tenant sourcing and monthly rents will all be covered by the management company, which means you don't have to deal with stressful student tenants.
Brand new building - A huge benefit is the building itself. Off-plan are new developments, so the design, interior, specifications and technology of the property are new and innovative. This adds significant value to your property investment and it will make the unit more attractive to students.