
ELITE BLOG

INVESTING IN STUDENT ACCOMMODATION: IS IT STILL A GOOD BET?
Investing in student accommodation has long been a popular strategy for UK property investors, offering strong rental yields and consistent demand. However, with changes in student demographics, university expansion, and shifting expectations around housing quality, the landscape of student property investment has evolved. The question on many investors’ minds is: is investing in student accommodation still a good bet in 2024?
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In this post, we’ll explore the pros and cons of student accommodation investment, taking into account changes in student demand, the importance of university locations, and potential returns.

The Pros of Investing in Student Accommodation​
1. Consistent Demand
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One of the key advantages of student accommodation is the consistent demand. The UK is home to a number of world-renowned universities, attracting students both domestically and internationally. Despite fluctuations in other parts of the property market, student accommodation tends to maintain stable demand, particularly in cities with large university populations.
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Moreover, as more international students choose the UK for higher education, demand for student housing has remained strong, particularly in cities like London, Manchester, and Edinburgh. International students often have greater financial support, making them more likely to rent premium accommodation. With universities expanding and offering more places, this demand is likely to continue.
2. High Rental Yields​
Student properties often offer higher rental yields compared to standard buy-to-let properties. This is partly because student housing is typically rented out on a per-room basis, rather than as a whole property, meaning rental income can be maximised. In cities with high student populations, such as Leeds, Liverpool, and Sheffield, landlords can benefit from a steady stream of tenants looking to secure accommodation near campus.
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Student properties also tend to have lower vacancy rates. Since demand for housing is synchronised with the academic calendar, landlords are less likely to face prolonged void periods, and properties can often be let for the entire academic year.
3. Low Tenant Expectations (Traditionally)​
Historically, student tenants have had lower expectations when it comes to property standards. While this is changing in some markets (especially with the rise of high-end student accommodation), students may generally still be more accepting of basic living conditions as long as the property is functional and in close proximity to their university.
4. Long-Term Investment Potential
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Investing in student accommodation in a thriving university city offers potential long-term capital appreciation. Universities tend to expand over time, leading to increased demand for housing, especially in areas within walking distance of campus. Properties in prime university locations can appreciate significantly over time, adding another layer of profitability to the investment.


The Cons of Investing in Student Accommodation​
1. Changing Student Preferences​
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The expectations of student tenants have been rising, with many now seeking higher-quality living spaces. The trend toward purpose-built student accommodation (PBSA) has created competition for private landlords. PBSA developments often offer premium amenities such as gyms, study rooms, and high-speed internet, attracting wealthier students who are willing to pay more for added convenience and comfort.
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As students become more selective, private landlords who don’t keep up with modern standards could struggle to attract tenants or be forced to lower rents to stay competitive. This shift means that investing in student accommodation may require higher upfront investment in property upgrades to meet changing demands.
2. Maintenance and Management Challenges​
While student tenants provide consistent demand, managing student properties can be more challenging than other types of buy-to-let investments. Students often lack experience in maintaining a property, and wear and tear can be higher due to the nature of student living. As a result, maintenance costs can be higher, and landlords need to be prepared to deal with more frequent repairs.
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Additionally, student accommodation often requires hands-on management. Since students rent on a yearly or term basis, properties need to be let out repeatedly, creating more administrative work. Some investors choose to hire letting agents or property managers to handle the workload, which can eat into profits.
3. Seasonal Nature of Tenancies
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​Unlike traditional tenants, students typically vacate properties during the summer months, this has previously not been an issue as the tenancy contracts usually run for 11 or 12 months, however, with the new Rental Reform Bill, and tenants being able to offer 2 months’ notice, this can create gaps in rental income. The academic cycle means that income from student properties may be more unpredictable than from standard buy-to-let investments, where tenants typically rent for longer term. It is also worth noting that PBSA are exempt from the new rental term rules being introduced through the Rental Reform Bill.
4. Potential Regulatory Changes
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The student housing market, like all parts of the UK rental sector, is not immune to regulatory changes. Government initiatives to improve housing standards, introduce rent controls, or increase taxes on buy-to-let properties could impact the profitability of student accommodation. For example, stricter energy efficiency standards could require significant investment in older properties to ensure compliance.
Additionally, the Labour government’s focus on rent controls and tenant protections could impact student accommodation landlords, particularly those in cities with high demand. Investors must stay informed of potential regulatory changes to avoid being caught off-guard by new requirements.

University Locations: The Key to Success
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The location of a student property is one of the most important factors in determining the success of an investment. Properties within close proximity to popular universities are far more likely to attract tenants and maintain high rental yields. Cities with multiple universities or those with large student populations, such as Manchester, Birmingham, and Bristol, are particularly attractive for student property investment.
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In 2024, cities like Manchester and Leeds continue to stand out as hotspots for student accommodation investment due to their growing university populations, affordable property prices, and strong rental yields. London, while more expensive, still attracts a large number of international students, making it a lucrative market for those with the capital to invest in high-end student accommodation.
Potential Returns and Exit Strategy
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​Investing in student accommodation can offer attractive returns, particularly for investors who buy in high-demand areas and cater to modern student needs. However, the long-term profitability of student accommodation also depends on having a clear exit strategy. Selling student properties in areas with declining student numbers or oversupply could prove difficult, so investors should keep an eye on university expansion plans, student intake numbers, the effects of the Rental Reform Bill, and the development of new PBSA.
Conclusion
So, is investing in student accommodation still a good bet? The answer depends on several factors, including location, property type, and how well the investor can adapt to changing student preferences. While the student accommodation market still offers strong demand and high rental yields, the rise of purpose-built student housing and evolving tenant expectations mean that investors need to be more discerning and willing to invest in higher-quality properties.
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For those willing to take on the challenges of managing student tenants and ensuring their property meets modern standards, student accommodation can still be a profitable and reliable investment. However, it's crucial to do thorough research, choose the right location, and stay informed of regulatory changes to maximise the potential returns from this niche market.