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Increase in demand for student accommodation

by Sorcha DugmorePosted on

Rising university applications are putting pressure on rental markets in student cities across the UK. With rising student numbers, and fewer landlords entering the market, it seems that this trend will continue to grow over the coming years.

This could lead to an increase of rental prices of up to 5% according to Unite, the UK’s largest developer of student accommodations

Data suggests that there are 3.5 students for every bed in purpose-built student housing in the UK. With student numbers only expected to rise in the coming years, this market is only going to become more competitive.

What can we expect over the next year?

  • Demand, and as a consequence prices, for student accommodation will surely rise across the UK through 2023.
  • More property investors may take the opportunity to explore student rentals as an option for their portfolios.
  • Landlords may benefit from rapidly increasing yields on their student lets.
  • This trend is likely to continue both in major cities and smaller student towns.
  • The trend seems to be higher in northern student cities such as Manchester, Bradford and Nottingham. As well as a noticeable rise in demand in coastal university towns.

Presently, there seems to be a lack of landlords investing in new student lets despite the potential for profit increases over the next few years.

Student properties are known to have one of the greatest yields out of any housing lets. Charging students per room, rather than the rental for the entire property, means that rental income is naturally high without having too many negative repercussions for the tenants. Larger student houses (with four or more rooms) have highly compelling yields against the value of the property.

Whilst student lets are short-term in nature, each year landlords can guarantee a fresh set of students seeking accommodation in the area. A well-located student house should have no problem securing new tenants year-on-year, whilst having the freedom to evaluate rental prices annually before welcoming new tenants to the property.