The UK student accommodation market is one of most lucrative and safest investment opportunities around. As the quality of university halls of residence is no longer sufficient to accommodate today’s students, private landlords have been providing an attractive package to capitalize. Several investors have been offered the opportunity to make investments in high-end student accommodation flats, which are constructed around the country. These development projects have become promising investment projects that guarantee good returns.
The key to making a good investment is to know what you are signing up to. A major factor that all investors must need to get right is the kind of property that will be best for accommodating students. Here are the three most popular categories of student accommodation:
Student pods comprise of single rooms with a student block and shared facilities, such as a kitchen. A large number of these investments come fully managed and are sold off-plan. Since this investment is primarily fully managed, student pods provide a hands-off opportunity to earn from rental income. Several management companies offer definite amounts rents over a fixed term, guaranteeing you earn a fixed return at prearranged rate.
Another kind of student accommodation is HMO or a House in Multiple Occupation. There is a complicated legal definition to explain what an HMO is. To put it simply, it refers to a building where multiple households can live by sharing facilities. In this case, a household can be members of a family who live together or unmarried couples. Dividing a huge property into multiple occupancies generally yields higher profits if the property is let as a single residence.
3. Self-Contained Student Apartments
Self-contained apartments provide students with a single unit accommodation, which has a living room, a bedroom and a small kitchen. They frequently feature other shared facilities, including gym and laundry services. Similar to student pods, a majority of self-contained apartments are sold off-plan and come fully managed. Self-Contained Student Apartments allow investors to make maximum returns from rental income without any direct involvement. These can be re-sold to the market, like HMOs, which makes them a better option than student pods.
How to Make the Right Decision
If guaranteed rent is a selling point that got your interest, you can search for an independent property management company to guarantee the rent for you, regardless of the type of property you choose to invest in. Once you have found the right property for investing in student accommodation, make sure to check the local prices. This way, you will know whether the property on the market is of the same value as the current local value.
In case you are preparing to rent it out yourself, it is important that you first test the market. You can do so by putting an advert to know the response you would get from prospective tenants. Generally, you should get at least 20 responses within a couple of days of posting in London. The number can be as low as 10 if you post outside London.
Eventually, your choice of investment in student accommodation property will rely on the kind of investment you make. Typically, off-plan schemes are the easiest way to invest in student property. However, this may not always be the case. Moreover, several schemes will deliver on expectations but not all may live up to their promises. Managing your own portfolio can be a full-fledged venture. This is why this option is not for investors who are looking at this as a side-gig.
About the author:
Elena Prokopets is a content manager at www.maltasothebysrealty.com. Her interests include travelling, reading and working out. She is a consultant of young entrepreneurs, and helps her local charity Caritas on her spare time.