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Where to Invest in Private Halls of Residence?

Posted on February 12, 2015 by Ceri in Investment

We have stated previously on Private Halls that the student accommodation sector is becoming increasingly lucrative for investors.

Students are willing to pay a premium for quality accommodation but which university towns offer the best returns and yields for an investor as a result?

Fortunately a website called StuRents has carried out a survey and found which areas have students paying more than non-students for similar properties.

Student accommodation in private halls of residence

This effectively means that students are paying a premium for student accommodation which means that the opportunities for investors in private halls of residence have the potential of higher yields.

StuRents found that Loughborough students are paying out around 36% more for their accommodation than non-students in similar properties in the town.

Indeed, students here are paying £80.21 pppw whereas workers pay around £58.94 for the same properties.

From the survey, it appears that landlords in the Midlands and Northern England can enjoy a higher premium for student accommodation.

Best premiums for student lets are in the North

That may come as a surprise for potential investors in private halls of residence since London has traditionally had higher rents and higher costs of living than in other areas.

In the capital, students pay on average £202.40 pppw – but this is at a lower rate than non-students who pay to £299.40 pppw to live in a similar property. That’s a discount of nearly a third for being a student.

However, all of the 10 most expensive places for students to live are in the North.

The second most expensive place for university students is Durham and Lincoln is third.

The chief executive of StuRents, Tom Walker, said: “The general consensus is that students in the northern half of England represent a premium demographic with rents adjusted upwards to accommodate for this.”

He added that in cities with a growing demand from young professionals the pressure on rents is high but student accommodation is being discounted.

Most expensive student rents in UK

The next most expensive cities in the UK for student accommodation are Huddersfield, Middlesbrough and Hull.

The list is completed by Bolton, Lancaster, Derby and York.

In comparison, the cheapest cities for student accommodation are to be found in Reading, Oxford and, surprisingly, London.

Next on the list are Brighton, Bath and Bournemouth followed by Edinburgh and Cambridge.
The next cheapest student properties are found in Cirencester and Southampton.

Investors can search out premium student rents

Another explanation as to why students pay less rent than non-students is that during the recession property developers entered the student housing arena and began building on land which in turn increased supply to force down rents in a competitive environment.

As we made clear in our previous blog article, ‘Investing in private halls of residence‘, students around the UK are increasingly demanding quality accommodation and are willing to pay a premium for the privilege.

Among their choice is to move into private halls of residence and this sector is increasingly becoming very popular with investors as a result.


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