With such a high demand for purpose-built student accommodation (PBSA) across UK university towns and cities, it has become one of the most lucrative sectors in the UK property market, currently worth approximately £46 billion. As regulations on the homes of multiple occupancy (HMOs) have become more stringent, new-build blocks of student flats are appearing rapidly on city landscapes across the UK. In 2016, the student property sector saw a boost from international investors, with market share increasing to 64{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8}.

As student accommodation isn’t technically classified as housing, developers aren’t bound by the same quality assurance standards and restrictions as typical dwellings. Rather, they are treated in the same way as care homes, hospitals and boarding schools, and are not subject to the standard building regulations of housing. Therefore, to ensure the best possible returns can be made, developers often take full advantage of the relevant freedoms of this type of accommodation by utilising parking space for extra rooms and communal facilities.

This market is proving to be highly appealing for overseas investors who, especially after the recent fall in the value of the pound, are able to make excellent returns if they invest in student accommodation. As a result, the proportion of international investment entering the UK property market has almost doubled in the last two years, with £1.2bn coming from Singapore alone in 2016.

It is clear as to why property investors are snapping up student accommodation to make healthy yield returns on their capital but, as the cost of going to university continues to rise, students’ expectations of their accommodation are rising significantly. Students are no longer willing to accept below-standard accommodation and instead are seeking en-suite bathrooms, good quality communal space to socialise and relax, alongside having all bills such as electricity, gas and water fully included in their rental price.

Currently in the UK, there is an definite under-supply of student accommodation across many UK towns and cities, particularly in areas where universities are expanding hugely and taking on an increased number of students year-on-year. In September 2018, Zoopla released their latest ‘Top 10 University Buy-to-Let hotspots’, ranked on yield returns on student accommodation. Find the latest table below:

 

The Top University Buy-to-Let Towns – September 2018

(Ranked by gross yield and calculated on a 4 bed property)

Rank University Town Average Monthly Rent Average Asking Price Gross Yield  
1Edinburgh (University of Edinburgh)£2,216£403,4316.59{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8}
2Glasgow (University of Glasgow)£1,425£263,4826.49{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8}
3Stirling (University of Stirling)£1,382£288,1245.76{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8}
4Salford (University of Salford)£1,394£295,2945.66{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8}
5Belfast (Queen’s University)£999£212,6345.64{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8}
6Dundee (University of Dundee)£1,119£244,0665.50{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8}
7Hamilton (University of the West of Scotland)£1,135£253,2565.38{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8}
8Leeds (University of Leeds)£1,301£297,4195.25{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8}
9Manchester (University of Manchester)£1,286£298,3815.17{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8}
10Aberdeen (University of Aberdeen)£1,406£333,2055.06{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8}

 

It is particularly important to note that all 10 locations are situated within the north of the UK, with 3 in the Midlands, 6 in Scotland and 1 in Ireland, thanks to reasonable average asking prices of 4 bedroom properties, delivering high gross rental yield returns. Within England for example, Manchester, Salford and Leeds all deliver over 5{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8} yield returns and proven to be an attractive prospects for investors seeking student accommodation property.

Here at Gower & Mae, we source the most sought-after student accommodation across the UK to ensure that not only are students living in properties with high standards but investors can feel secure knowing that the property is of the highest quality. Our latest opportunity takes us to Bradford, the UK’s 6th largest city with a university student population of 9,000 with the ability to receive 8{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8} assured yields for the first 2 years and expected to be fully occupied. In addition to this, the development is particularly attractive to students, being just a 5 minutes walk away from the university and including a fully equipped gymnasium available 24/7 to all residents. Get in touch with our team to find out more.