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Student property stands out

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Giles Beswick, director from luxury student accommodation provider, Vita Student, explains how the UK student property market has boomed in the last ten years, attracting an increasing number of investors into the market.

In the past decade, the rise in the number of students in the UK – in particular international students – has caused a shortage of suitable accommodation, with universities unable to keep up with the demand.

As a result, the development of new student properties has fallen to the responsibility of the private sector, causing projects of various size and quality to emerge all over the UK.

The growing market has attracted many investors who have recognised it as an investment opportunity as it can deliver much higher rental yields than other property types. In fact, this trend has become so strong that the sector is now recognised as an asset class in its own right.

Traditionally, Houses in Multiple Occupation (HMOs) have been the focus for investors as they benefit from multiple rents, but time-consuming and costly maintenance obligations means many are now looking for alternative options.

Self-contained, purpose-built student apartments are now gaining momentum in the sector as these fully-managed schemes offer landlords better rental returns while taking away the hassle usually associated with managing student property.

One example of such a provider is Vita Student which offers assured rental yields of 9% for two years which, compared to the UK buy-to-let average of 5.3%*, is a very favourable option.

These returns are so strong that some people who haven’t previously considered property investment are now turning to the sector as an alternative to conventional savings plans and pensions.

Two of the developments Vita Student launched in Liverpool last year (199 studio apartments) were sold out in a matter of months and the 279 unit development in Manchester is currently over 80% sold after just five months.

One of the key reasons that these projects have proved so popular is because the high quality of the studios are unlike anything else in the marketplace, which means that the student occupancy rate is expected to be extremely high, protecting future rental returns.

The success of these schemes indicates that confidence in the market is soaring and with investors from both the UK and abroad taking advantage, and the number of students continuing to rise, this trend looks set to continue.

Couple choose luxury student property for pension plan
A husband and wife team who have invested in property for 21 years believe UK student accommodation is a sound investment and a better option than a pension plan.

Luana Mattey and her husband Andrew have just returned to the UK after living and working in South Africa for the last 30 years. They’ve previously invested in properties in South Africa and in Spain but see the UK student market as a significant growth area. The couple view property investment as a safer option than a pension plan and are confident their investments will enable them to live comfortably once they reach retirement age.

Luana and Andrew purchased an off-plan apartment at Vita Student’s Tinlings development in Liverpool with a £71,000 investment. They were attracted to the scheme because it is a hassle-free development as Vita Student fully manages the unit on their behalf – finding the tenants and overseeing the management once they move in.

Commenting on the purchase, Mrs Mattey said:
“We’ve invested in property for over 30 years and during that time have experienced the highs and lows of owning bricks and mortar.

We feel student accommodation presents a strong investment opportunity, particularly a development like Tinlings where the location and specification are ‘spot on’ making its occupancy an almost certainty. In addition, all the stress is taken out of the process by VITA Student as they manage the apartment and distribute rental earnings to us.

In the past, we’ve always invested in property that needs a degree of work so something like this which is completely ‘hands-off’ is a first for us. As we’ve only just returned to the UK, we wanted a solid investment that was affordable and one that had the potential to offer us an income when we decide to retire. This fits the bill perfectly.”

For more information visit VitaStudent.com

If you're looking for student accommodation check out Rightmove Students.

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*LSL Property Services April 2013 buy-to-let index

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