Student accommodation outperforms other buy-to-let investments

By: Veselin Valchev
Veselin Valchev
Veselin is a data scientist with extensive experience in commodities and natural resources within the FTSE 100. His data… read more.
on Sep 9, 2015
Updated: Apr 9, 2020

As UK universities and colleges prepare to receive a record number of students this year, the average cost of entering the student accommodation sector is on the up, Property Reporter revealed today.

The website also noted that returns on investment for this growing segment of the residential property market are outpacing more traditional buy-to-let (BTL) categories.
More than 409,000 students have been accepted into UK universities and colleges this year, three percent higher than last year and an all-time record.
The growth in student numbers has resulted in a surge in demand for accommodation, leading to a higher rents and better yields for investors.

Houses of Multiple Occupation (HMOs) in particular are proving popular with property buyers.
“Typical rents are significantly higher for student properties, than a comparable BTL property in the same city,” said Mish Liyanage, managing director of student property investment agent Mistoria Group. “We have experienced a sharp increase in demand from investors looking to acquire HMOs for students this year.”
Liyanage’s remarks echo a report from Platinum Property Partners earlier this month, which flagged HMOs as the most profitable and stable buy-to-let investment option. The report suggested that HMOs can generate rental income that is up to four times higher than that achieved in a standard buy-to-let property.
Significantly, student accommodation firm, Unipol Student Homes, is expected to reveal a seven-percent increase in student rents from last year when it reports in November.
Meanwhile, real estate services provider Savills has forecast that student accommodation investments in the UK for 2015 will total £5.5 billion, more than double that of 2014.

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