13 Dec by Amy Jackson

Manchester Student vs Residential Buy to Let: Which is the Best Investment?

Should I Choose Student Property Investment in Manchester?

Manchester property investment is undoubtedly one of the best routes to take if you’re considering a UK buy to let venture. With one of the country’s highest-performing property markets in terms of demand, capital growth and rental returns, savvy investors should definitely keep Manchester on their radar.

Two of the most common and successful buy to let ventures in Manchester are student property investments and residential investments. While these are both fantastic options that come with plenty of potential, a lot of investors are left wondering which property type to choose. If you’re stuck between buying a residential or student investment property in Manchester, take a look at this guide.

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Download our FREE Student Property Investment Guide

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Think about your Property Investment Goals

Manchester Student Property

To work out whether you should choose student property investment in Manchester or residential buy to let, you need to first think about your reasons behind investing and establish what’s most important to you.

 

Are you Focused on Demand?

Manchester is a city which generates a lot of rental demand as a whole. Both young professionals and students dominate Manchester’s rental market year after year, seeking reliable, stylish, and high-quality accommodation. When comparing Manchester student property investment against residential investments, however, there’s reason to believe that student buy to let may be the more attractive option.

Manchester boasts a student population of over 90,000 which spans across many of the city’s major institutions such as the University of Manchester, the University of Salford, and Manchester Metropolitan University. While residential properties certainly generate a lot of demand from a mixture of tenants like young professionals and young families, a lot of these type of tenants may be renting a home while they save for a home of their own. Students, on the other hand, aren’t likely to be buying their own property while at University, especially if they’ve travelled from another city or overseas country. This is why student properties are so in-demand year after year, ensuring consistent rental returns for the duration of your investment.

Bridgwater Wharf

Are you Focused on Growth?

Capital growth is at the forefront when it comes to Manchester investments. Constantly in the headlines for its impressive property growth statistics, Manchester is one of the best cities in the UK for investors who care about capital growth. Recently, property prices in Manchester have grown at an annual rate of 7.4%, with predictions for further growth of 10.5% from 2020 to 2022. So how do both student and residential investments compare when looking at Manchester property price growth?

Location has a lot to do with capital growth potential, as even though Manchester as a whole is experiencing property price increases, not every postcode performs as highly as the rest. Many of Manchester’s upcoming residential investment opportunities are based in high growth regeneration areas. The upcoming luxury development Bridgewater Wharf, for instance, is located in Salford Quays, with excellent access to MediaCityUK. MediaCityUK is one of the most popular areas for young professional tenants to live, which is why new and exciting developments are launching regularly in the area. For student property, Manchester investment can bring you high growth if built in a prime area, but you may be more likely to benefit from a boost in value with a residential property like Bridgewater Wharf.

Liverpool Population Doubles

Are you Open to a Range of Tenants?

Identifying your target tenant is one of the most important steps in a property investment strategy. Some investors may prefer limiting their investment to one tenant group, while others prefer the freedom of being able to rent to a range of different tenants. Take some time to think about what you would prefer with your investment, as this can help you work out the type of buy to let investment to make in Manchester.

With Manchester investment, student property will attract only one type of tenant – students. If you want to target students specifically, then Manchester student property investment is the clear route to take. By investing in student property, you can put more of a focus on researching your target tenant and finding out what they want from a rental property in order to attract higher levels of demand. Students are also considered one of the best tenants to let to by a lot of landlords due to the fact that they often have a guarantor who will provide rental payments even if your student tenant is unable to. On the other hand, if you want the ability to rent to a number of different tenants, residential property investment will be your best option. While city centre new-build properties like Local Blackfriars are likely to attract young professional tenants, there’s still the chance you could generate interest from other tenant groups with a residential property, ensuring a constant and varied stream of demand. 

Liverpool Rental Yields

Do you want the Highest Yields?

One of the things that Manchester buy to let stands out for is its rental yields. Average rental yields for the Manchester area stand at around 5.55%, while certain Manchester postcodes such as M6 and M3 are known to generate yields as high as 7.43 and 7.89%. While the type of rental yields that come with your investment will depend a lot on the area the development is based in, the property type itself can also have some impact.

Rental yields are worked out by taking your expected yearly rental income and dividing it by the property’s purchase price. If your property has a low purchase price and high rental costs, you’re more likely to end up with a higher rental yield, allowing you to get more from the investment. For Manchester investment, student property is known to generate slightly higher yields than residential investment. This is because student properties tend to be cheaper to buy than residential homes, since they’re often offered as a smaller studio apartment. This isn’t to say, however, that residential properties in Manchester can’t still come with impressive yields, with the Salford Quays Bridgewater Wharf bringing in 6% projected returns.

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