Student Property Investment: The Pros and Cons

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A few short years ago, student property was something of a hidden gem for investors. Now, it is a popular property investment option and a much-hyped opportunity. However, some investors remain wary, feeling that the hype that has grown up around student property could be obscuring significant catches. Certainly there are both advantages and potential pitfalls when it comes to investing in student accommodation. It is essential to weigh these up carefully when deciding whether student property investment is for you.

Student Property Investment

Advantages to Student Property Investment

One of the key advantages to student property investment is that it forms a relatively secure investment opportunity. Demand is generally high and continues to grow. In many university towns, this outstrips supply and means that landlords have little difficulty filling properties.

In some bigger university towns which experience higher demand, purpose-built student developments are springing up. These offer affordable outlays, and often guarantee rent for an initial period. They are popular with international students, a growing market that looks set to continue to supply demand.

In fact, demand for student property is experiencing a major boom at present, and a number of factors make this boom look set to continue. As well as increasing numbers of international students – something actively encouraged by the government – UK student numbers are recovering well from the dip that followed the tuition fee hike. More and more students are also choosing to stay at university for postgraduate degrees to gain an advantage in the competitive job market.

Most student accommodation, however, comes in the form of privately let shared houses. These give added security over some single-occupancy property investment opportunities. Because it is let out to multiple people, a shared house is likely to provide some income even on a bad year. Having four rooms filled one year instead of five will mean reduced income, but won’t leave you with nothing at all.

Disadvantages of Student Property Investment

Some student investment properties can be lucrative. However, for the most part the financial attraction lies in the security of the investment rather than in size of profits. While this is obviously no bad thing, it does mean that income can be lower than you may get if you make a success of a riskier investment option.

Many landlords find that student properties require more maintenance than other properties. As such, it is important to ensure that you factor in maintenance costs while considering your potential investment, and lower your overall profit expectations accordingly.

Sometimes landlords find that students can be less reliable at paying rent on time. While this is not exactly a problem with every tenant, it happens more frequently than with non-student tenants and this is an important risk factor to consider.

The Bottom Line

Student property is not a fast-track route to high-level yields, but it is a safe and profitable investment. There are risk factors, pitfalls, and added expenses that require careful consideration before any investment is made. Nonetheless, for those looking for a source of steady, safe returns, student property is often a good place to put your capital.