Investors are flocking to invest in student lettings as a huge demand for accommodation is out of step with a dwindling supply of bed spaces in most university towns and cities.
High demand linked with guaranteed rent is attracting investors at all levels - ranging from buy to let landlords converting family homes to student lets to institutional investors constructing purpose-built tower blocks in city centres.
However, the golden days of student lettings may be numbered as higher tuition fees and a cap on places begin to take a grip in future years and to keep rising rents in check, according to a student housing review by property consultants CB Richard Ellis.
“While there could well be a slight spike in rents later this year on account of increased demand before the fee hike comes in to play, rental growth is likely to be more muted over the long term,’ said the CB Richard Ellis report.
“The impending feee increase will have a number of ramifications on the higher education sector as a whole, as well as the nature of demand for accommodation.
“We do not see a dampening demand overall, but rather an increasingly competitive environment placing the emphasis on value for money.”
The report also highlights that rising numbers of foreign students and changes to student visa rules will also have an impact on student lettings.
Student numbers from the European Union are up 6%, while those from outside Europe rose 12%, compared with a 3% increase inside the UK.
“For tuition fees of £9,000 a year, students will become more discerning, expect higher standards, more choice and a better overall further education experience. Accommodation will play a key part in this,” said the report.
CB Richard Ellis also points out that many cities have a massive short supply of student letting - citing Brighton with five students chasing every bed space, while Dundee has seven students vying for each bed and Glasgow nine.
