Types Of Student Accommodation
It’s useful to break student accommodation down into 4 main types:
House Of Multiple Occupation (HMO)
An HMO property typically consists of three or more people from separate households living together and sharing communal areas, such as bathrooms and kitchens. These are usually former residential houses that have been converted to maximise the number of bedrooms. HMO properties are let on a room-by-room basis and rent is often inclusive of bills allowing the tenant to receive an all-encompassing and hassle-free, upfront cost.
Purpose-Built Student Accommodation (PBSA)
Whether built from the ground up or converted from larger premises, these blocks typically house anything from around 50 to 500+ bedrooms formed of either studios, single ensuite rooms or cluster flats, and often provide a range of lifestyle facilities onsite such as laundry services, gyms, cinemas, concierge and cleaners. PBSA blocks are also very attractive to overseas students because they usually offer all-inclusive packages, including bills and on-site security. This provides a much easier, seamless and hassle-free experience for those who are starting a life in a new country without the help of their family. Similarly, this can also be an attractive option for post-graduate students.
Single Apartments And Pods In PBSA Blocks
These are often sold off plan during the construction of PBSA to fund developer costs and normally come with a rental guarantee period.
Single Apartments In Residential Blocks
These can be repurposed to rent to students, normally without planning permission if they are for two students or less.
Is Student Property A Good Investment?
In 2019, the student accommodation market was valued at £53bn a year, with a prediction of 3% annual growth and increasing demand. Far from the elitist privilege of years gone by, attending university and seeking higher education is quite the norm. Between 2018 and 2019 there were over 2.3 million students across the UK, making investing in student accommodation a lucrative venture and one that benefits from future demand. Despite the uncertainty of the pandemic in 2020, the number of students has continued to increase with a record of 40.5% of 18-year-olds applying to university. Many universities across the UK are oversubscribed and as a result, the demand for accommodation continues to increase due to larger student populations. High levels of demand ensure a constant stream of both tenants and rental income for those who invest.
Typically these run from 1st July to 30th June creating a very predictable lettings cycle, minimising the chance of void periods, and virtually ruling out the need to ever evict tenants.
Typically more than six months in advance which gives landlords a lot of security, high visibility on lettings status and ample scope to manage future performance.
This provides a high degree of income security, drastically minimising rental defaults and the consequent need for expensive court action.
This simplifies and lowers the cost of the lettings process significantly compared to letting on a room by room basis. It also offers another layer of income protection in that all tenants are jointly liable for ensuring all rent is paid.
Whether monthly or quarterly, and in the case of some PBSAs, up front for the year by many international students, this provides significant cash flow benefits for landlords.
This is especially true for properties finished to a very good standard as students are an ever more demanding and discerning consumer and willing to pay higher rents for superior accommodation.
Student landlords are never asked to contribute to this cost, and aren’t susceptible to adverse and costly changes in regulation (e.g. backdated tax banding of each separate room).
The Article 4 Direction restricts the creation of new HMOs in popular student areas. This effectively reduces competition while boosting likely annual increases in a property’s value. Read more about the implications of Article 4 Direction here.
Whilst not all student accommodation is the same, it is possible to talk in general terms about some of the distinctly advantageous features of investing in this asset class have been discussed above.
How Can accumul8 Help You?
For more advice on student property investment or for information on our services, please contact us on 0330 111 0888 or at firstname.lastname@example.org. We are more than happy to help and we look forward to hearing from you!
“New to the world of HMO investment, I could not have asked for a better team to help me navigate through sourcing, purchasing, refurbishment, renovations and letting. The trio partnership of Accumul8, Renov8 and Loc8me is a dream team. As a remote investor this has taken the stress out of venturing into this market. Always at hand when you need advice, Beth is always prompt and efficient in dealing with matters and getting back to you. Professional, polite and courteous at all times.”
“Dealing with Mike has been a breath of fresh air. Accumul8 know the market inside out, are enthusiastic, honest and have always delivered on promises. It’s never easy being a long way from a property but I am more than happy with those guys involved. They sold one property for exactly what we wanted and has sourced a builder to work on our other one which has produced a letting at a higher price than before, in the space of 3 weeks. I couldn’t be happier or more confident in what is being done on our behalf.”
“Mike Hughes provided outstanding service in the sale of our property in Lincoln. He went way beyond the duties normally expected of an agent and proactively anticipated and dealt with issues that would be raised. Mike has very good contacts with the local authority, which allowed difficulties to be resolved and at every stage he communicated most effectively with everyone. His professionalism is an example to others and I can strongly recommend him to whoever would benefit from his services.”
“I’ve worked with Mike on multiple properties – their service is simply first class. I’m always impressed by their expertise and their proactive approach. I would have no hesitation in recommending them to anyone looking for an invaluable partner in property.”
Founder of Horton’s Estate Agents
“The team at accumul8 and loc8me look after us extremely well. They’ve helped us build and manage a substantial portfolio over the last few years. We’re very grateful to Mike for his commitment to every aspect of every deal that he sources for us and look forward to doing business together for many more years to come.”
“Working with the team at accumul8 helped me expand into three new target cities within a 12 month period and add 120 beds to my student property portfolio. This would have been impossible without their sound advice, ability to source assets at speed, and capacity to undertake and manage two large refurbishment projects. Each acquisition and renovation project came with it’s own challenges which Mike and the team walked me through. As an investment professional myself, I can wholly recommend accumul8 to investors looking for a highly effective and client focussed service.”
“I contacted the team at accumul8 with some general questions surrounding HMO property – I wasn’t sure whether it was the right investment for me. Through their informative communication and proven track record, they gave me the necessary confidence in the student market. By only bringing properties tailored to my investment profile, they clearly listened to my requirements and since initial contact, I have purchased my first HMO through them and am about to complete on a further two.”
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