28 | STUDENT PROPERT Y | CAMPUS SERVICES
This September, a record 2.3 million plus students are expected to be in the system puting increased pressure on universities, for both places and accommodation. This increase in numbers is also driving up accommodation costs in many areas, with gross rental receipts having increased by as much as 11% for the forthcoming year. More notably in strong university towns, such as Durham, the supply remains structurally limited which typically leads to a feverish letings period each year. From a student’s perspective, property
requirements are normally quite simple. Some prefer the communal living that a shared house offers while others look for purpose-built facilities. But in either case, students today demand hassle-free, secure, high-tech, high-spec spaces that are within easy walking distance of the campus and other local facilities like shops, bars and restaurants. Affordability is also important with modern rooms costing anywhere from £100 per week, including bills, to some costing at least £300–£400 in the ‘smarter’ parts of major cities like London. Many universities have increased
their own provision of student accommodation by refurbishing existing halls of residence or building new ones. Large property developers have also stepped in to build and operate new complexes to capitalise on increasing demand. These purpose- built student studio complexes deliver great accommodation and are ideally suited to institutional investors or education providers that take a long term investment view, particularly as they retain overall control of all elements, including direct access to new student tenants and both the rents and maintenance charges. Over the past few years, there has been
an explosion of these new developments on the market and thousands of additional beds have already been added to the national portfolio this year. Unfortunately, with space often at a premium in the majority of university
Sevi Rixson is Managing Principal of London-based Urban Student, which manages and has advised on around 1,200 student rooms and plans to add a further 50 properties over the next year.
SAFE AS HOUSES
Sevi Rixson from investment and property management specialist Urban Student looks at the various types of accommodation available from both the student and an investment / landlord perspective
towns, it’s becoming harder to undertake these ‘new multi-unit builds’ so the shortfall is typically met and funded by smaller, independent investors or landlords, reverting to traditional HMOs or more creatively repurposing property like turning redundant retail storage spaces into desirable accommodation. The top-flight universities are
constantly striving to atract even more students by providing the best education facilities as they seek to expand or, at the minimum, retain their blue ribbon status. The introduction of tuition fees is also not that relevant when looking at the total number of students wanting to atend university each year. Almost all courses are in demand and while the UK’s domestic student numbers are fluctuating, any dip in the numbers is more than offset by growth in international students. Large institutional investors are not
‘thick on the ground’ and they are highly selective in the schemes they support,
which is why independent investors and landlords are also vital to the sector. At the entry level individuals can, with minimal capital, buy into one of the various Bond Funds that become available. These offer investors a modest return on investment but there is also a high exposure to risk and sizeable management fees will often apply. Moving up, private investors with
between £40k–£100k have been seduced with enticing ‘leasehold pod’ investments, citing rental guarantees of circa 7% return each year for an initial two to five years. Developers typically funding pod projects use this investment to buy the land or property and undertake the development with minimal personal capital outlay. This type of development, unlike
HMOs, is not considered to be an individual property, so investors normally have to find the full purchase cost themselves as a mortgage or other
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