Residential buy-to-lets may have been making all of the headlines in the national press recently, but it is student property that has been the investment of choice for many over the last decade or so. Shrewd investors have been building portfolios chock full of student properties, and that trend looks set to continue as we move forward into 2016.
So, what makes them such a draw for those in the know? Let’s examine why this kind of acquisition has struck a chord with so many for so long.
Demand is high
Put simply, there isn’t enough high quality property on the market to meet the ever-growing demand, and that demand shows no sign of diminishing any time soon. One of the main reasons why the student property market is expected to remain strong over the coming years is the removal of the cap on the amount of places universities can offer students.
Money is already being injected into campuses across the country so that these seats of learning can expand their capacity and open their doors to greater numbers of students; the vast majority of which will all require accommodation while they carry out their studies.
International enrolment figures are rising, too, and these overseas students will also add to the demand that the supply simply cannot meet at present.
Student property is remarkably stable
Every investment has an element of risk attached to it, but student property does seem to ride out market blips far better than any other type of investment available today.
This section of the property market has steadily increased over the last decade, a time frame which includes what many considered to be the greatest recession the world has seen in a generation. While pensions and stock exchanges floundered, the student property market kept on rising, regardless of what was happening elsewhere.
Growth is forecasted to continue, too
The rise in investment across the first half of 2015 within the student housing market tells us that confidence is high in this sector. £1.5 billion more was spent this year than during the same period in 2014, bringing the total investment value up to an astonishing £3.98 billion.
This kind of conviction in the student property market is fuelled by the perception held by many investors that the residential buy-to-let market may be slowing. This belief, while as yet unsubstantiated, is largely due to the changes in taxation brought in by the chancellor in both the main and mini-budgets this year.
Parental guarantors ensure that you’ll get paid
As demand for property is so high, it really is a landlord’s market. This means that many of those seeking decent accommodation are willing to go the extra mile to ensure that they land the property they want.
Parental guarantors are not unusual in the student property market these days, and there have even been multiple instances of landlords being offered full payment up front to secure a property. This kind of security can make all the difference to a landlord, especially one who is relatively inexperienced with maybe just one or two properties within their portfolio.
When you take these factors into consideration it is easy to see why the smart money has been going into student property lately. Furthermore, we can’t see any reason why this section of the property market will not continue to perform well over the coming months and years.
If you enjoyed this blog post then perhaps you might like to read “Is Student Property The UK’s No 1 Investment?”
Feature image credit: My Make OU via 123RF.com