Student Vs Residential Property: What Should I Invest In?
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.
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.
What Are the Pros and Cons of Student Property and Residential Property?
There are benefits and disadvantages to both student vs residential property investment. If you’re torn between the two, the following points should help you.
The Pros of Student Housing Investment
- Student property is affordable, which can mean higher rental yields and better rental income.
- Student numbers in the UK student market are high in a number of cities including Liverpool, Manchester, Nottingham and Sheffield. This means fewer void periods for investors.
- Student property investment is great for first-time buyers who want to make a hands-off investment.
- Many investors find that student tenants are the best group to rent to.
The Cons of Student Housing Investment
- Some investors can find student property limiting as you can’t rent to other tenant groups.
- It can sometimes be difficult to secure a buy to let mortgage for student property.
- Student housing can often suffer more wear and tear if students don’t stay on top of cleaning and maintenance.
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.
- The residential property market is experiencing some of its highest growth in years. UK property prices are predicted to grow by an average of 21.1% by 2025.
- 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 a HMO.
The Cons of Residential Property
- For those with a lower budget, residential properties may be too pricey. This is especially true if 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.
Thanks to a combination of high rental yields and strong capital appreciation potential, student and residential property both represent a solid buy to let investment.Amy Jackson, RWinvest
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 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.
Your Investment Goals
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 to a solid buy to let investment.
With this in mind, both student and residential property are beneficial.
However, residential property investment does have a slight upper hand in this regard.
Residential property and student property both have high potential rental yields, especially if investing in a city like Liverpool.
With capital growth, however, the residential property market is often more attractive.
Residential property prices in the UK have grown by record highs, with an increase of 50.1% between 2010 and 2020.
Your Investment Location
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 an attractive option.
This is because the population of student 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.
Your Target Tenant
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 tenant, 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 to 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.
Stylish Baltic Triangle Living
Assured 7% NET Rental Yields
15-20% Below Market Value
ELEMENT - The Quarter
North West's First Eco-Development
8% NET Rental Return
300m Away From New £1bn Royal Hospital
Off Market Manchester Apartments
Premium Residential Investment
5.5% NET Rental Return
10% Deposit Required
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.