Did Student Property Just Get A Degree Hotter In 2012?

Investing in Student Accommodation

Becoming a student is a good long-term investment in your future and so is property investment. Put the two together and you have a collision that makes student property white hot for investors.

 

Ken my student landlord friend, is always boasting about the money he makes on student property.

He is so into the concept of investing in it, that when I mention anything more adventurous, he laughs at me and says “Brett, come on, why would I want the hassle? I’ve got all these properties that don’t cost me anything in time or money.

I don’t need to go running around Europe or getting on a plane and I don’t need to worry about tenants.

I hate to admit it, but he has a point. There is a major shortage of university accommodation across the United Kingdom.

Why Invest in the Student Property Market?

When most people think of student property they think left over takeaways, beer can pyramids and dusty unused textbooks lying around. Student Buy-to-Let Investors like Ken on the other hand see pound signs.

Last year in the UK – other investors like him put nearly £348 million into the student property market, chasing average yields of between 5.25% and 7%.

The student property market is renowned – at least with those in the know for outperforming the wider rental market – with landlords of student properties generating a higher average income by letting properties on a per-room basis rather than the usual per-property basis.

By leasing property in this way, last year student landlords made an average income of 6.45%, compared to 5.94% from properties rented out to young couples.

The West Midlands proved to be a goldmine for those investing in its student property market. Home to nine universities, including Warwick and Birmingham, it offered the highest annual yield for investors of 6.5pc.

Yorkshire wasn’t far behind, the region is a hive of student activity with 14 potential locations to choose from including Leeds, York and Sheffield. This reflects in its average annual yield of 6.4%, providing the West Midlands with some healthy competition.

But what about this year? What are the prospects with all those fee increase coming in? will this be a watershed for investors like Ken?

Not a bit of it. The anticipated slump hasn’t materialised to any noticeable level. In fact applications from foreign students have risen by 13%.

All of this will put even more pressure on this year as demand for property shows no signs of being affected. Students still want to pay inflated tuition fees and will simply borrow more money to pick up the shortfall.

Luckily for my friend Ken it doesn’t take a degree to understand that the student property market will remain one of the most lucrative investment opportunities for 2012. So well worth making an educated decision and adding student property to your portfolio this year.

Which areas will you be investing in student property this year? Please leave your comments below.

Kind regards

Brett Tudor
Property Expert

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