Buying student accommodation can be a lucrative investment if you know where to look, what to expect and the potential pitfalls. Student numbers in the UK continue to grow, despite the pandemic, and international students still make up a healthy part of the market. As always when buying property, buy in the right location, at the right price and you should see attractive returns on your investment.

HMOs have always been seen as a safe bet by property investors. Dividing accommodation up into separate units for multiple renters or renting out large houses to students or young professionals means multiple rental streams and attractive ROI. As the job market shrinks due to the effects of Coronavirus, the demand for higher education is expected to grow, meaning good news for property owners.

There will always be demand for houses in popular university towns and cities, so there's never been a better time to think about investing in buy-to-let student accommodation. But research is key to your success as an investor. While many areas in the UK have large student populations, not every town or city has the same high-level investment potential for buy-to-let landlords. Before you start your property search, do your research. Property commentators believe the following places have the potential to give landlords the best ROI:

Liverpool

Brighton

Newcastle

Bradford

Sheffield

Cardiff

Leeds

Manchester

Nottingham

Birmingham

Edinburgh

In these areas, it’s likely that students will be queuing up to live in your property. Whether choosing an more traditional HMO that houses multiple tenants or a new build contemporary apartment in a development, don’t rule out investing in student accommodation before looking at the figures. With the face of student accommodation changing, it’s not just HMOs that are thriving. Slick new student developments are popping up that offer shrewd investors attractive returns on investment. These modern, bright properties are making not just students, but potential investors view student accommodation with fresh eyes.

Look for properties at the lower end of the market that will bring you the highest returns on investment, the more expensive the property to buy, the lower the potential profits. This steady income from student housing is a win-win for landlords who want a reliable investment, ROI and guaranteed income stream. Treat students well and keep the property well maintained and they’ll be more likely to stay in your property for a longer period of time; the average course length is three years, with medical students studying for six. This means guaranteed, secure rent for a landlord. 

Five tips to getting the best out of student property investment:

1. Contact universities to ask if you can become a preferred agent for rentals. Your property will need to comply with certain standards but it’s a good way of getting your property noticed and, more importantly, rented out quickly.

2. Search for properties with at least three bedrooms. Students tend to rent in larger groups – the more bedrooms, the better the profit.

3. Ensure every renter has a guarantor. If they default on rental payments, the guarantor is liable to pay.

4. Look for properties in a good location: close to the campus, transport, shops, city centre, public amenities and nightlife. Get the location right and you’ll be able to demand attractive rents.

5. Look into a joint tenancy agreement, rather than individual agreements with each tenant. If one of your tenants leaves, the others will be liable to pay rent and it won’t affect your regular income stream.

So why not consider student accommodation for your next property purchase?

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