Student property rental prices climbing as market becomes more popular

02-Nov-2016

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







Student property is becoming one of the most lucrative investment asset classes, and landlords are seeing income levels increase.

When we think of student accommodation, many people will still think of soulless buildings, cheap prices and poor quality. However, as anyone with a hand in the market will know, student accommodation has changed greatly over the course of the last few years, with quality and purpose now the cornerstones of every block that pops up across the country.

And for investors, this rise in quality has meant an ability to charge students higher prices to live in accommodation that they want to call home while they study; a preference rather than simply a necessity. Nationwide, the price of student property has risen rapidly as the quality and the purpose behind builds has found its way.

For example, at the University of Stirling in Central Scotland, students staying even in university owned accommodation have seen a huge rise in what they have to pay for the high-quality options.

As recently as 2006, students at the university were paying £64 per week for the most expensive accommodation. But now, just ten years later, they are being asked to pay £141 per week for the most expensive, after the institution spent millions knocking down blocks originally erected in the 1970s and replaced them with buildings that were designed with student experience in mind.

And it’s a similar story across the UK at the moment, with the higher quality of build and the better experience that newer student property offers allowing landlords to charge higher prices, and bring in better levels of income that have made student accommodation one of the most popular investment options around.

Rents rise by 23%

According to a new study carried out by the National Union of Students (NUS), in the last five years the price of property has risen in line with the increase in purpose built properties in the student sector.

It said that between the 2009/2010 academic year and the 2015/2016 year, there was a rise of 23 per cent in the average weekly rent that students were being asked to pay across the country. This means that during this period, the average rental costs for students in any week climbed from £120 to £147.

In terms of what landlords can garner from these statistics, the way that the student market has risen is far more impressive than what has been seen in any other area of the property sector in general.

The rises of 23 per cent in just five years in terms of rental price are remarkably double what has been seen in the private rented sector throughout the same period of time, showing just how lucrative student property has become, and why investment levels are expected to hit £4 billion for this year as a whole.

And it’s not just rents which are going up.

Figures released by Knight Frank have shown that the value of stock in the student property sector is now worth £43 billion.

“There are more investors in the sector now than there ever have been,” said James Pullan, Knight Franks’ head of student property. “It is one of the few sectors in the property world that has delivered consistent rental growth every year since the economic downturn.”

Student property and Brexit

Post-Brexit student numbers remain strong however, the latest data posted by UCAS has shown a 9 per cent decline in the number of European applicants.

In reality, European students only make up 6 per cent of the UK’s total number of students. At this point, the decline is not thought to be of significance.

The continued drop in the value of sterling will also increase the UK’s appeal to international students, who will benefit from favourable currency rates.

This article has been provided by Experience Invest.

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