With 424,000 new students entering higher education, Sophie Williams asks whether the student property market is a risky business or a strategic investment?
If you’re looking for a decent return on property investment, you could do worse than consider letting it to students. With over one million of them living and studying away from home, in addition to a record 26,800 students from the EU attending UK universities this year, there are ample rewards for those investors and landlords who let to students.
However, before you think you can get away with a lick of paint and a couple of sofa beds, it’s worth knowing that to guarantee tenancies, landlords must invest in properties that would once have seemed far too good for messy student tenants, and equip and present them to the highest standards.
Colin and Jo White, student property landlords who have owned and managed properties in Surbiton for the past four years, are among those who are doing just that.
“We always seek to provide high-quality service and accommodation so that the properties are looked after and we are able to attract good tenants,” says Jo White.
The White’s properties attract students from all walks of life, although their more expensive properties are often let to foreign and medical students whose requirements are higher than the average UK student’s.
“Foreign students do probably expect good quality accommodation, a fact that doubtless reflects the wealth of their parents,” says Jo.
But regardless of where students come from, what do they expect from rental properties?
“It’s all about location, location, location,” says Jo. “Being close to the university campus, and to shops and bars is essential for them. They must be in the heart of the student quarter.
“Also, we find a demand for a good quality kitchen and two bathrooms is very high.”
Her remarks are echoed by Amanda Lacey, a graduate of St Mary’s University, Twickenham, who says students view properties armed with a checklist of essential features.
“Location is important,” she says. “Being close to uni, to nightlife and to the supermarket is a bonus.”
Regarding the property itself, Amanda and her fellow students have equally high expectations.
“Kitchen and bathroom amenities are super important. A microwave on its own just isn’t good enough. And a decent shower is essential.”
Ironically, given students’ reputation for staying up late and partying all night, a night of good sleep is also high on their list of priorities.
“A tip from my friends in their third year of uni was to always check the mattresses,” says Amanda. “You shouldn’t be afraid to sit on them when viewing a house so that you can make any requests for newer, quality mattresses.”
Of course, there may be many students living away from home and in need of quality accommodation, but how do landlords reach them? Student website padsforstudents.co.uk specialises in advertising the most desirable properties in student cities around the country. The company highlights the value of investing in quality student lets but also working with universities to get your properties filled.
“Nearly half the number of student bedrooms rented out in the last academic year were acquired by educational institutions,” says a spokesperson. “Encouraged by sites such as ours, the direct-to-institution market is now a growing area.”
Of course, all this property speculation assumes the UK’s decision to leave the EU does not destabilise the market by deterring foreign students.
Jo White is confident that Brexit is not a threat to her company’s investments and is convinced the student let market will continue to grow.
“I believe Brexit will be positive on most counts for the UK,” she says. “The EU and the international student market is likely to be strengthened due to the favourable exchange rate. The UK student market should hold up.”
Even so, there are concerns that a possible decline in the number of EU students attending university in the UK (currently 125,000) could affect rental prices in cities with big student populations. This could result in falling rental revenues, as well as in disappointed investors whose annual returns may decrease.
As a result of the referendum, the UK’s continued involvement in the European Region Action Scheme for the Mobility of University Students (Erasmus), a student exchange programme across the EU, is uncertain. It is possible that following its withdrawal, the country could no longer be eligible.
Nevertheless, despite these uncertainties, the growing numbers of domestic and EU students preparing to embark on higher education in the UK mean property investors, student letting agencies and private landlords alike can be confident that demand for their properties and services can only increase.
Jo White is certainly feeling confident: “Student property in the UK, especially in the South East, is in short supply relative to demand, and so subject to buying in the correct location and presenting the property attractively, it remains a great market to invest in.”
