While classic comedies like The Young Ones and Rising Damp portrayed students as people who lived in the grottiest accommodation and had living standards to match, the truth is that even then the student world was far more mixed. Today, the ever-increasing number of students going to university obviously creates strong demand in the rental market and there is a need for different grades of property to satisfy different budgets.
The Council Tax Issue
One key point, which sets “student property” apart from the general “young adult” market is that fact that, under current rules, students are exempt from paying council tax. If however, students share a home with working adults, then the household become liable for council tax. For this reason, students can prefer to stick to living with other students. At current time, this feature of the tax landscape seems set to stay in place for the foreseeable future.
Investing in Student Accommodation Route 1 – Buy to Let
University towns are popular locations for buy-to-let landlords. On the one hand, the reason for this is obvious, lots of students means a ready market for rental property. On the other hand, it also means that there can a lot of competition from other investors. This can push up prices to the extent that rental yield may be significantly lower than would otherwise be expected. If a suitable property can be found, the next step is to fill it. Assuming the property is intended for more than one person, you basically have to choose between letting it out as a complete unit or running it as a share-house/HMO. There is definitely a market for letting out complete properties students, which can share with their friends and this would, in principle, give you the option of making the residents jointly and severally responsible for the rent and any damage to the property. These properties can, however, be harder to fill than standard share houses, particularly since some students (and their parents) may have issues with their potential liability if another party acts irresponsibly. The line between share houses and HMOs is generally decided by the local council, which may impose its own rules on the latter. Landlords may also find that in practical terms they need to be accredited by a recognised scheme before they can target the affluent end of the market, although professional landlords are unlikely to find this a difficult task.
Investing in Student Accommodation Route 2 – Property Development
Those who remember student residences as being places with questionable heating and plumbing will find the current generation of student property developments a far cry from the student halls of their youth. Whereas once halls of residence were built and maintained by universities purely and simply so their students had somewhere to sleep (other than in lecture halls), the current generation of student accommodation is often developed with or by private companies and managed to a very different set of standards. The availability of quality accommodation intended purely for use by students (i.e. protected from competition from working adults and without any issues related to council tax) can be the deciding factor in picking one university over another. Depending on their location, such properties can either be intended for year-round use by students (who may want or need to work during the summer) or do double-duty as short-term lets over the holiday periods, particularly the summer. They are generally the preferred option for first year students new to the area and the university and now many students like to remain in them for continuity and convenience even when they are acclimatised and have made friends.