With the student application deadline having closed in the UK, it’s time to look at why the student housing market is an incredibly wise strategy for UK expat and foreign national investment.
There are currently a record number of full-time students studying in the UK. Increasingly, students are having to look toward the private rental sector to find accommodation as there is a huge shortage of purpose built student accommodation. The private rental sector is also struggling from a stock shortage and this is contributing to high prices for rental properties. With this in mind, there is an increasing need for purpose built student accommodation, which presents an excellent opportunity for UK expat and foreign national investors looking to build an investment portfolio.
What’s the Student Situation?
The number of full-time students in the UK is currently 2.2 million. This number means that there are three times the number of students for each bed in purpose built student accommodation. Hence the need for the private rental sector to pick up the slack. ‘The student sector has been continually growing’ says Stuart Marshall, CEO of Liquid Expat Mortgages. ‘And there’s no sign of this slowing down, with the last few years seeing record numbers of UCAS applications, and some of the highest numbers of acceptances. With such a competitive private rental sector, students are struggling to find properties – hence the need for competitive purpose built student accommodation. Rents are soaring in the private rental sector because of a lack of stock – rising 10% in 2022 alone, with no sign of a change in trajectory in 2023. The dire situation for student housing is evident in universities’ actions: York and Bristol universities are placing students in nearby towns and cities, while Edinburgh is converting common rooms into student dorms, and Glasgow university is housing students in hotels.’
‘Because of the extremely acute need for student accommodation, we’re having a lot of conversations with UK expat and foreign national investors about the prospect of investing in purpose built student accommodation. Student accommodation is historically a very strong and stable investment strategy as there is a readymade pool of renters, which is always growing. Rental yields are also exceptionally high and, because of the relatively short length of the student year, investments are usually quite hands off. Student properties are also highly mortgageable, as they are usually new builds and comparatively affordable. This allows UK expat and foreign national investors to easily utilise some of the excellent UK expat and foreign national mortgage products available at the moment. It is these attributes that make investing in purpose built student accommodation an excellent choice as part of a UK expat or foreign national investment portfolio.’
Where to Invest.
To maximise their profits from the purpose built student accommodation market, UK expat and foreign national investors should look towards areas where the supply issue is most acute. ‘This will mean high student numbers, falling numbers of student property listings, and strong rental growth. The cities that meet these criteria with the strongest rental growth are London, Manchester, and Salford, which all have rental growth in excess of 15%. Manchester and Salford’s close proximity is likely linked and indicative of a desire to study in-and-around the Manchester area, which has long been a favourite both in the student accommodation sector and the private rental sector. Birmingham has some of the highest number of full-time students alongside Manchester, and is also a historically popular choice amongst both consumers and investors.’
Any of the areas with documented issues in housing students are also good choices as demand is incredibly high in these areas and this contributes to high rental prices. Bristol moved into Savills top tier for purpose-built student accommodation in 2022, because of the growth of undergraduate applications and the shortage of available accommodation for students. ‘But, really, unlike conventional buy-to-lets, there are very few bad choices when it comes to student accommodation location’ says Stuart Marshall. ‘A nationwide shortage of student property and record student numbers mean that student rental growth is high across most of the country – certainly in any major educational hubs. Savills reports that even cities with falling student numbers, like Nottingham, have seen rental growth in excess of 7% in the last year. This is unique to the student accommodation sector and shows what a strong investment student properties can make, especially as part of a larger investment portfolio.’
‘An expert UK expat or foreign national mortgage broker is perfectly positioned to advise UK expat and foreign national investors on how best to integrate purpose built student accommodation into an investment portfolio, while utilising some of the excellent UK expat and foreign national mortgage products available.’
Liquid Expat Mortgages
Ground Floor, 3 Richmond Terrace,
Phone: 0161 871 1216
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