Why Does Student Housing Boost Income on Your Portfolio

By Simon Morris On Wednesday, September 17 th, 2014 · no Comments · In ,

This week Simon Morris explains why student housing boosts income for property portfolios, making it the perfect investment opportunity for any UK property investment fund.

It’s Simon Morris’ Job to Know Which Markets are Profitable

Simon Morris is an independent, London-based property expert, who acts as a consultant to UK property investment funds on how to maximise revenue on their property portfolios.

As such, it is his job to know which markets are on the up, which are going down, and which have the capability to generate profit in the long term. Simon’s experience has taught him that student housing has the capability of being a safe capital generation property class.

There’s Value in Renting on a Per-Room Basis

A BDRC Continental Report commissioned by Paragon Mortgages shows why student housing is profitable. Essentially, it tends to outpace the wider residential market, because they are rented out per room, rather than per property.

The report goes on to show that this makes a big difference. Student housing was shown to earn a 6.5% average income for landlords. Meanwhile, average rental income on property rented to young couples – the people most likely to rent rather than buy – was shown by the report to be lower, at 5.9%.

Can Student Property Remain Profitable in the Long Term?

So clearly, there is money to be made from student housing, but can it be sustained in the long term, with students leaving every year? Yes it can, because data shows that the number of students studying in the UK isn’t going down any time soon.

At the moment, the UK has a total of 2.3 million students. Yet this number isn’t static. More international students are coming to the UK to study than ever, and they all need housing. The influx of international students is expected to raise the number of people studying by 20% in the next five years, meaning that there will only be more people to rent to, and that rental yield will continue to flow when you invest in student property.

The Benefits Outweigh the Risks

Yes, student housing comes with downsides for any UK property investment fund. Students can be irresponsible, they could damage the property etc. However, the benefits can far outweigh the risks for any smart investor, which is why any UK property investment fund looking to generate long-term revenue stream should include a student element in their property portfolio.

For more information on property investment, visit the Simon Morris Investment Guide.

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