Top 10 places to invest in student real estate …
Lender and savings bank Paragon Bank recently conducted research highlighting the best student real estate investment locations in the UK. The results show that owners of student housing with rentals in smaller university towns generate the best returns on average.
The study could be useful for owners of student accommodation wishing to identify locations in the UK that can generate the highest rental returns.
Cities and towns that could offer high returns
With an average property price of £ 231,534, Swansea ranks number one as a student property location in the UK with the highest average yield of 9.56%. Hull comes in second with an average yield of 8.68% per year.
By making comparisons between student populations, the number of universities in a city or town, and top returns, Paragon Bank was able to uncover more about the locations of student properties.
One of the main findings was that the best returns aren’t always found in cities with high student populations. Seven of the top 10 sites have only one main higher education institution where the student population in those areas was typically less than 25,000. Of the 10 sites, only Liverpool, Coventry and Leeds had more than one. university.
According to rental investment specialist and HMO provider The Mistoria Group, investor demands for student accommodation in Liverpool, Salford and Bolton have increased by up to 21% from UK and international investors.
Mish Liyanage, Managing Director of The Mistoria Group, explains: “Undoubtedly, investors get considerably higher returns with properties rented to students, compared to those rented to non-students in the same town or city. For example, student landlords in Liverpool achieved an average gross rental yield of 13% in the third quarter of 2021, compared to 9% for those who did not rent to students.
Student property can be similar to a normal hire purchase, where the entire property is rented out between friends who cohabit, or a student HMO where students rent out each room individually on their own rental agreement.
A property is considered an HMO if at least three tenants live there, form a household, and share bathroom or kitchen facilities with each other. Investors can currently acquire a four bed HMO for students and professionals, fully refurbished and furnished and rented for the coming year, for less than £ 175,000 in Liverpool.
Investing in HMO student accommodation offers a long-term investment option, as the property is very likely to be in constant demand throughout the calendar year.