Student property investment

Published Aug 16, 2019 – 3 mins read

Many parents wonder if it’s a good idea to buy a student property investment for their child to live in whilst they are at university rather than waste large sums on rent.  The possibility of positive capital growth during the period at which your child is studying can make the investment can make it a potentially profitable opportunity.

Is it a good idea?

Whilst on the face of things it’s a sensible plan and will most definitely save sending money into the abyss of renting, buying a property has many associated costs that mean this is probably only a good option for you if you’re planning for the long term, beyond the time in which your child is studying.

This means you should also consider whether you solely want the property to appeal to students or, once your child has moved on, you’d prefer that professionals rent the property.

Where to buy an investment property

Just because a city has a university does not automatically mean a property anywhere in the general area will be an exceptional investment and guarantee it to be profitable.

If you’re looking for a student property investment that will solely only ever really appeal to students then make sure you’re buying a property in a location that is within easy reach of the local campuses.

On the other hand if you’d prefer to buy a property which works well for your child now but will appeal to professional tenants in the future then you should consider transport connections to places of work.

Large or small investment property

You might be inclined to purchase a large investment property where your child will have a room and where the other rooms are rented out to other students, there is a likelihood that this might be more profitable but this also entails more work, unless you employ a property management company but this takes away from your profits.

Decisions of this nature are usually entirely dictated by your lifestyle and preferences, some simply do not have the time to manage a large property with multiple occupants.

Certain larger properties will be deemed a HMO, House of Multiple Occupancy and will have to adhere to special rules and regulations for properties of this size to gain a licence to let. You’ll have to prepare to spend money upfront to get the property up to standard to meet the requirements before it can be let.

A smaller student property investment might be better suited if you simply want a place for your child whilst they study and then somewhere to rent out without too much hassle.

Associated costs

Stamp Duty Land Tax will be applicable to your student property investment purchase and at the higher rate if you already own another property, there are online tools which allow you to work out the amount that would be charged.

It’s useful to have a handle on the costs associated with purchasing an investment property before you begin searching so that should something come up that might require works before its liveable, you know how much is in the pot for this.

Which university towns are best?

Whilst there will be demand from students for accommodation wherever there is a university, some locations are a better bet than others.

Cities which have more than one university and/or a strong economy are stronger candidates for a successful rental investment in the long run.

London investment property

There are several top universities in London including London School of Economics and Politics and Imperial College London. Property prices in the capital city are likely to be much higher than other locations, you can usually expect a steady rise in capital growth as long as you buy a good property in sensible area for the right price.

Cambridge investment property

Student property investment in Cambridge, particularly within easy reach of Cambridge University prove to be popular with property investors year on year; due to the continued demand from students fuelling the rental market. Cambridge is also a central hub for many companies meaning there is also strong demand from professional tenants.

Prices in Cambridge can be steep and are often compared to London prices. With fast and regular direct trains into London Cambridge has many plus points when considering it as a place to invest.

Oxford investment property

Often compared to Cambridge, the rival universities challenge one another across many sports and academic pursuits. Oxford is a beautiful city with many period properties on offer, not far from the Cotswolds and only a short train journey away from London it is a popular place to live.

Buying an investment property

There are many excellent places to buy an investment property near to a university, including the locations listed above Bath, Bristol, Warwick, Durham, Manchester, Exeter, Loughborough and Newcastle all pose good opportunities.

Of course if you’re buying a property specifically for your child it’s unlikely you’ll be dictating where they will study based on the best potential student property investment purchase.

If you’re considering purchasing an investment property our team can provide expert knowledge and advice to ensure you make a well informed decision. To learn more about our property finding services please contact us.