Student accommodation in the UK is a thriving business. New figures estimate that £5.8bn was invested in the market in the last year alone.
With Chancellor George Osborne moving to lift the cap on university number restrictions, students searching for private rented accommodation look sure to rise.
If you are looking at investing in student accommodation, particularly so called student pods, you could be forgiven for expecting a substantial rental return. There are however a number of measures you must take into account before choosing to invest in this type of buy-to-let accommodation:
- Resale value and capital growth-Unlike other residential properties , the resale value and capital growth potential of student homes is not high. The total value of the property will go up and down with the market. In particular, should you invest in so called ‘student pods’ with specially fitted amenities, the potential to sell it on will be much smaller than more conventional flats or HMO’s. What’s more, differentiating between an investment or real estate property could cause problems when looking to sell on.
- Compliance will take more effort-In light of recent changes to your obligations as a landlord, you are a now responsible to conduct more checks on would-be renters. Not only will you probably be landlord to a number of students, who will all need to be referenced, you must now conduct Right To Rent checks to establish renters’ eligibility to live in the UK. These checks will take time and effort, therefore you must factor this in to your timescales and make sure you understand.
- Wear and tears-Historically, students tend to cause more damage to property than other tenant groups. It makes sense then for you to keep this in mind when working out budgets and assessing rental yields.
- Close contact-Students also are more likely to be in touch with problems more frequently. You must make sure that you are in a position to offer round the clock assistance. Alternatively, if you planning of sub-contracting work to plumbers, gas engineers etc, they must also be able to deal with situations promptly. You do not want to claim on your unoccupied property insurance if damage occurs in an empty home!
Of course, there are many good features to becoming a student landlord. Rental returns are usually greater, your property will hopefully not have many void periods and décor needn’t be pristine. Make sure you take out the correct landlord insurance and are aware of your legal obligations before investing!