Student property used to be something of a niche investment asset. The majority of universities across the country had more or less enough homes to house the majority of their students, which meant that private sector landlords were more often than not seen as a luxury for those small numbers of students who wanted higher end properties to rent.
However, in recent years, the growing number of students, both international and domestic, at UK universities, has meant a growing need for more private landlords and their properties. This has meant that the student market has moved out of the niche category it once found itself in, becoming a mainstream asset class. In the last three years, more than £11 billion has been invested in the sector, showing the real power it now has.
Key to success in what has become a very popular asset class, however, is finding where best to invest in order to get the best returns and the strongest levels of income over a number of years. So where are the best places to buy for student property investors? We take a look at just a few of the best towns and cities.
With large numbers of students around and a relatively high rental price compared to the rest of the country, London is ideal for those with a bit of money to spend on more luxurious properties. Sure, it might cost a little more to invest in high-end apartments, but the vast number of foreign students looking for this type of accommodation in London makes it worthwhile as an investment option. Rental prices will make the investment cost seem like a decent price to pay when you take a long-term approach to investing in student property in the capital.
On the flipside of the luxury market that appears for students in Central London, there are many towns and cities around the capital where there is money to be made from London-based students who want to save money and commute to university. Cheaper rental prices will attract high numbers of students to rising commuter towns, and the emerging status of places like Luton, where regeneration is underway, mean that investors can get properties relatively cheap, meaning you can expect returns as high as seven or eight per cent when investing there.
Similar to Luton, Brighton has become something of a beautiful retreat in recent years for students who have grown tired of the urban lifestyle in London. They tend to be the older students, so good quality accommodation is the order of the day in Brighton, but the fact you can get to London in just over an hour on the train means that demand is increasing all the time for seaside student homes on the south coast. It's worth getting a foot in the door of Brighton's student market now, because it looks like it could be about to really come to life in the next few years.
Bristol is one of those rare rental market gems where there is a potential for not only excellent income from the cost of letting property, but also from capital gains. In the last few years, no university town has enjoyed better house price rises than Bristol, and it's rental yields are also impressively high thanks to demand increasing year after year as the student body continues to expand. Bristol is perhaps one of the safest places to buy, and it will suit those who have both short and long-term goals for their property investment.