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Student Vs Residential Property: What’s the Best Choice in 2024?

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    Learn More About Student Vs Residential Property

    Are you a beginner investor? An experienced investor? Or just someone who already owns an investment property but is looking to grow a wider portfolio?

    Whatever your investment status, the topic of student vs residential property is likely something you’ve thought about.

    For many people, choosing the type of investment property to buy is a difficult step.

    You want to be sure that the property you invest in offers attractive buy-to-let returns while also fitting your budget and personal goals.

    This article will help you understand whether student vs residential property in the UK is right for you.

    Here, you’ll learn about the pros and cons of each property type and discover investment opportunities for both student and residential buy-to-let in the UK.

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      Students inside HMO

      What Is Student Property Investment?

      Student property investment refers to an investor buying property to rent exclusively to student tenants.

      There are currently two common ways buyers can make a student property investment in 2024.

      1. Purpose-built student accommodation. Sometimes referred to as PBSA, this is a type of student property specifically built with students in mind. They’re usually located nearby to university campuses and come with facilities like WIFI, onsite gyms, and building management. There are plenty of types of PBSA, including new builds and renovated transformed student property of older builds.
      2. Houses in Multiple Occupations. Otherwise known as HMOs, an HMO is typically a shared student house that is rented to multiple student tenants. These tenants will share amenities like kitchens and bathrooms but will separately pay rent.

      As for which method you choose, it will highly depend on your goals. HMOs are commonly found outside of the city centre and typically charge lower rent to their student tenants.

      However, due to multiple paying tenants, returns can be incredibly high for HMOs.

      On the other hand, student accommodation is popular among both domestic and international students and will typically be found in prime city-centre locations nearby to university campuses.

      PBSA has rapidly increased in popularity over recent years, with the demand for student HMOs falling, as students tend to pick higher-quality housing that outdated terraced houses can’t compete with.

      In fact, a report from Savills in early 2021 found that £5.77 billion was spent on PBSA in 2020 – the highest-ever amount – with investors confident in the ability of UK PBSA to deliver high returns despite Covid-19.

      This confidence looks well-founded, with an increasing number of students entering UK universities from across the world. The 2021 academic year alone recorded an 8.4% increase in university applications, according to the UK University Admissions Service, UCAS.

      You can learn more about the student property market and the latest student property investment opportunities by checking out our in-depth student property investment guide for 2024.

      Where to Invest in Student Property in 2024?

      To get the most out of a student investment, you’ll need to invest in the right city.

      To do this, there are a few metrics you need to keep in mind to get the highest chance of a successful investment.

      These include:

      • Focusing on cities with multiple quality universities.
      • Employment opportunities for postgraduates.
      • Graduate retention rates (how many graduates stay in the city after studying).
      • Nightlife opportunities for students.

      We’ve got a blog post outlining the top 10 best places to make a student investment, so be sure to give it a read.

      But likely, the top two standout locations boasting the strongest student property sector in the UK are Liverpool and Manchester.

      Both cities have an abundance of student houses, PBSA, and off-plan student property opportunities, boasting two of the best graduate retention rates in the UK.

      These options are some of Europe’s elite university cities, comfortably ranking in the top 25 student cities, and are well worth your time researching further.

      You can read our dedicated guides to Liverpool student property investment and Manchester student property investment by clicking the links.

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      Pros and Cons of Student Property Investment 

      The Pros of Student Housing Investment

      • Student property is available at a lower price point than other real estate strategies, often available below £100k, which can mean high and consistent returns from rental income, with high rental yields.
      • High demand for property thanks to large student numbers in the UK. This means fewer void periods for investors.
      • Student property investment is great for first-time buyers who want to make a hands-off investment.
      • Purpose-built student accommodation usually comes with its own building management, meaning you won’t need to handle landlord responsibilities.
      • If you buy with a property investment company, you could have a rental guarantee period and assured rental yields for a set number of years.

      The Cons of Student Housing Investment

      • You’ll likely see less capital growth than you would with a residential property.
      • Student housing is more suited to cash buyers, with it difficult to secure a buy-to-let mortgage.
      • HMOs can be incredibly difficult to understand due to extra legal responsibilities.
      • Student housing can often suffer more wear and tear if students don’t stay on top of cleaning and maintenance, meaning higher maintenance costs.

      What Is Residential Property Investment?

      Residential property investment is when an investor buys a property and rents it to a tenant for profit.

      The residential market exploded in 2021 with some of the highest growth ever seen – a symptom of a newfound appetite to buy homes post-Covid lockdowns.

      In fact, property prices ended the year in December 2021 at £254,822, according to Nationwide, a record-high that showed the highest house price growth in 15 years.

      Alongside the growth in house prices, the rental market also experienced a surge of high demand, leading to rent prices hitting £1,060 per month on average in December 2021 – just £1 from the record set in September 2021.

      And with the latest Savills property price predictions estimating up to a 17.9% rise in house prices in UK regions by 2028, it seems that there’s never been a better time to make residential investments in 2024.

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        Where to Invest in Residential Property? 

        Likely the best places to invest in UK residential property in 2024 are found in the North West and Yorkshire and the Humber regions.

        This is because these areas have some of the highest predicted capital growth potential, while also boasting some of the most thriving rental markets in 2024.

        The stand-out cities are likely Liverpool and Manchester, which have some of the highest capital growth and rental yields in the UK.

        In fact, over the last 12 months, Liverpool property prices grew by almost 18% – the second-highest out of the UK’s top 20 most populated cities.

        You can learn more about Liverpool property investment and Manchester property investment in our 2024 guides. Or you can check out our top 10 list of the best places to invest in property.

        Pros and Cons of Residential Property UK

        The Pros of Residential Property

        • Residential property investors have the choice to rent to a wide range of tenant groups. In city centre areas, this will most often mean young professional tenants.
        • Rental income is higher than it has ever been, with HomeLet recording an average rent of £1,213 in May 2023.
        • The residential property market is experiencing some of its highest growth in years. In some regions, UK property prices are predicted to grow by an average of 11.7% by 2027. Capital growth in residential property is higher than in student accommodation.
        • Young professional tenants are often open to high rent payments if the property offers a modern design, great location, and luxury facilities.
        • Investors can choose from different types of residential property, whether that means a city-centre flat or an HMO.

        The Cons of Residential Property

        • For those with a lower budget, residential properties may be too pricey, especially after record-breaking growth has placed the average UK property above £250k. This becomes even more expensive if you’re looking at cities like London, where average house prices exceed £500,000.
        • You may experience void periods if you buy a residential property in an area that has low levels of tenant demand.

        What’s the Difference Between Student Vs Residential Property UK?

        So what is the difference between purpose-built student accommodation and residential property?

        The main difference between the two property types is in the name itself.

        Student housing is rented only to students, while residential property can be rented by a wide range of tenant groups.

        This makes the decision-making process easier for those who want to target a particular tenant type with their buy-to-let investment.

        Those who want to rent to students, for instance, will opt for student housing as the obvious choice.

        Another big difference between student vs residential property is the cost.

        Student properties are often lower priced.

        This is mainly down to the size of each property, with student properties often being studio flats.

        You can learn more about how to invest in student property by following the link.

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        How Can I Decide Between Student Vs Residential Property?

        Now that you’ve read the pros and cons of each property type, how do you decide whether student property or residential property is the best choice for you?

        There are several things you need to think about:

        If you have a lower budget, let’s say, £50k, you will find investing in the student rental market easier due to the price of student properties.

        Right now at RWinvest, we have student investment opportunities from just £59,995.

        Investors can pay for the property either in full or by splitting payments into smaller chunks. Better still, our student accommodation offers rental yields of up to 8%.

        However, this isn’t to say that those buying residential property need to have a huge budget available.

        Even investors with budgets of around £100k can explore some incredibly lucrative residential investment opportunities.

        Our residential buy-to-let properties currently start at just £74,950 for our latest investment opportunity, ELEMENT – The Quarter.

        What do you hope to gain from investing in the property market?

        Do you want high rental returns, the highest possible capital growth, or a combination of the two?

        Knowing your investment goals paints a clearer picture and helps you choose a property to invest in.

        As you may know already, combining high rental yields with strong capital appreciation potential is the recipe for a solid buy to let investment.

        With this in mind, both student and residential property are beneficial.

        Student property tends to generate higher rental yields and may offer more consistent rental yields with a lower chance of encountering a void period.

        However, residential property investment can trump the student market with capital growth significantly higher than a student property.

        Overall, though, both choices can deliver an incredibly lucrative investment opportunity if you research the right areas to invest in.

        We know that location is important when selecting a buy-to-let venture, but what does location have to do with the property type you choose?

        If you choose to invest in student property in an area with low student numbers, you’re setting yourself up to fail.

        The same goes for investing in residential property in an area that doesn’t have a large population of young people.

        You may already know which area you want to invest in, so it’s important to research the housing market in this area before buying a property.

        For many popular buy-to-let cities like Liverpool, both student vs residential properties are attractive options.

        This is because the population of students and young professionals in the city is high.

        In other areas that may not be popular university cities, student investment is likely a no-go.

        Lastly, an obvious factor you’ll want to consider before choosing your property type is the group of tenants you’re going to target.

        Do you want to rent solely to students? Or would you prefer to rent to young professionals living in the fast-paced city centre?

        Alternatively, would you rather rent to both?

        While it’s rare to rent your property out to both types of tenants, it’s possible in some instances.

        Take our latest investment property, ELEMENT – The Quarter.

        ELEMENT – The Quarter is a mixed-use development that allows investors to rent the property to post-graduate students and typical young professional tenants.

        This is a great way to combine the benefits of both student and residential property.

        ELEMENT – The Quarter is located within walking distance of Liverpool’s Knowledge Quarter, which includes the Royal Liverpool Hospital and campuses at the University of Liverpool.

        The development is also close to great transport links and local attractions that appeal to all tenant groups.

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          Thinking About Investing? Contact RWinvest Today 

          If you’ve enjoyed our guide to student vs residential property investment and you would like to find out more about the latest opportunities to invest in the UK market, get in touch today.

          At RWinvest, we currently have some amazing student property investment opportunities and residential properties for sale, all offering high yields in great UK areas.

          If you’d like to discuss our available properties, or you’re still feeling unsure about whether property investment in the UK’s student vs residential market is right for you, our property consultants are happy to offer a friendly and informative chat.

          Always talk to a professional advisor for the best and most accurate financial advice tailored to your needs.

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          Reece Pape

          Reece Pape is a property writer at RWinvest. Reece is passionate about keeping property investors updated on must-have information and housing market news, utilising the latest property market statistics and data.


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