Rental prices in the UK’s student sector continue to rise

20-Apr-2017

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Davis Miller is a regular contributor at many sites and mainly focuses on business and investment related topics.







The shape of the UK’s student property investment market has dramatically over the last few years.

The student market has morphed from a sector landlords avoided into one of the country’s best performing asset classes and, with £4 billion of investment expected in 2016 alone, the market is showing no signs of slowing down.

Rising student property rents

According to data from the National Union of Students (NUS), rents in the student property market have increased by 23%. The average price of renting a UK student room per month has increased from £120 in 2009/2010 to £147 in 2015/2016.

For students, the increase in rents have been significant however, the increase in price has been reflected in the quality of the new-build properties now available on the market. What’s more, most purpose-built student developments are priced with bills included, which helps many students adjust to managing their money and moving away from home for the first time.

In these new developments, students often have free Wi-Fi access, the TV license is paid upfront, plus they can heat their room throughout the winter without having to worry about expensive bills turning up on their doorstep.

For investors, the increase has provided rising year-on-year rental returns.

An average increase of 23% is much higher than rental increases across other property sectors, indicating the lucrative nature of this high yielding property sector.

 

Spending power of international students

Good news for student property investors. A new study released by Universities UK has shown that international students who attend UK universities contribute over £25 billion to the country’s economy.

The research conducted for Universities UK by Oxford Economics between 2014 and 2015 has that overseas students paid £4.8 billion in tuition fees – 14% of the total university income. International students from outside the EU contributed £4.2 billion of the total amount.

Alongside tuition fees and accommodation, international student spent £5.4 billion off campus on goods and services and supported 206,600 jobs across the country.

Dame Julia Goodfellow, President of Universities UK, said: “Our world-class higher education sector is one of the UK’s outstanding success stories. We have the second largest share of the global market, behind only the USA. This is a potential growth area and there is scope for the UK to welcome more qualified international students and build on this success. To do this, we must present a welcoming climate for genuine international students and ensure that visa and immigration rules are proportionate and communicated appropriately. This will be even more important as the UK looks to enhance its place in the world post-Brexit.”

International students are the main market for upmarket, purpose-built student accommodation. High-quality accommodation designed for the student market will no doubt hold a prominent position in the UK’s continued effort to attract overseas students.

With Brexit on the horizon, the UK continues to position itself as an attractive location for overseas student to study.

It could be argued that the spending power of wealthy international students has driven the cost of renting up however, when compared to the UK’s residential rental market, prices remain reasonable when all bills are factored in.

 

Better standard of living

The new wave of purpose-built accommodation has been constructed with students in mind, with communal living and high quality finishes at forefront of developments.

Security is the cornerstone of this type of student accommodation. 24/7 CCTV, manned receptions, and secure fob lock access to areas in the buildings help to provide peace of mind for parents and students.

Students often have free access to onsite facilities including a gym, cinema room, laundry rooms, communal living rooms and outdoor space.

As bills are included in the price of the room, many students opt to stay in purpose-built rooms rather than HMOs to save money across the duration of the academic year.

Rental prices in the student market have risen across the country in line with the increased quality in purpose-built blocks.

The home-away-from-home experience has increased in popularity – especially among international students. Students are paying a premium for this experience which allows investors to charge higher rents and a better level of income from their property investment.
 

 

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