An Educated Investment
Gone are the days of dilapidated student digs. Now they demand high quality rentals – and parents who buy-to-let are reaping the rewards from a growing market. – By Peter Grant
According to property investment company, Grant Property, buying properties for students in the UK is not only an attractive and safe investment, but the company predicts that the student buy-to-let market is set to skyrocket.
There are over 2 million students in the UK, many from overseas and Asia in particular. The numbers are increasing every year and consequently the rental market is thriving. Parents are recognising the virtues of buying property for their student son or daughter to offset tax, save on rental outgoings and even generate an income from letting out spare rooms. But it is the institutional investors and overseas investors, attracted by the high rental yields and price growth, who are scooping up residential properties in their bid to capitalise on this flourishing market.
Peter Grant, founder of Grant Property, which has been sourcing, refurbishing and managing traditional UK buy-to-let properties for clients around the world in over 22 years, says that there has been unprecedented interest in this market recently with Brexit having no detrimental effect on the attraction. He said: “The UK student rental market is as safe as it gets. Occupancy levels are high and because the student market is less affected by economic or political events than other sectors, this provides stability for the investor. Uncertainty can certainly affect demand, but where some London properties dipped over the last couple of years, the regional cities scored, especially those with a high student population. We have seen an unprecedented surge of interest from overseas and UK investors, keen to get their hands-on UK properties in student cities outside London, including Manchester, Bristol, Nottingham, Glasgow and Edinburgh. And I expect that interest to skyrocket.
“The key to buy-to-let success is a flourishing rental market, and student accommodation has become the jewel in the crown of the UK property market, with strong demand delivering high yields. The aim of any investment is for highest overall returns. Our clients have seen returns of up to 28% pa over the last 22 years.
“And in spite of some areas of London registering a fall in house values in the short term, property prices in other cities across the UK prices are rising at their fastest rates for 10 years. The buy-to-let market remains strong and as the sector has been resilient enough to withstand the last few stormy years of economic uncertainty, it is expected to grow at a healthy rate in the future. We have never seen rents fall in 22 years, just this year we managed to secure a 15% rental increase across our portfolio.”
Nowadays students are a discerning bunch and they expect high quality. They want style, comfort and designer bathrooms – a high standard of living. So, according to Grant, student properties have to live up to those expectations. He says: “Student flats were notoriously basic at best and grim at worst but living in squalor is a thing of the past and luxury is now the order of the day. Landlords have a duty to protect their tenants in safe, comfortable and secure environments. We have found that if you provide tenants with a smart classy home, then it is more likely that they will keep it that way. Our focus is on traditional properties in good locations, not purpose-built blocks that tend to attract mainly first year students.”
There are strict regulations in the property industry and student accommodation is no different.
Grant adds: “Safety legislation requirements need to be regularly reviewed and upgraded so that all properties are fully compliant with all regulations and have the necessary licences. Those in the property industry have an obligation to continue to adhere to current standards and rules.”