Will buy-to-let student flats beat slump?

Published 12th Dec 2008

Student accommodation will provide good returns as a buy-to-let investment even during the recession, it was claimed today.

An increase in the number of students means housing for them is now more profitable for landlords than residential lets, estate agent Knight Frank said.

London has more students than any other city in Europe, with 260,000 studying full-time.

Experts say at least another 100,000 purpose-built student bedrooms are needed to meet demand, particularly from the growing number arriving from overseas. The collapse in the value of the pound has made London more attractive has a centre of study.

Developer Unite, which specialises in building student halls, has announced rents on its studios and ensuite rooms across London will rise by up to 25% next academic year.

In 2009/10 a studio room in the capital will cost between £240 and £348 a week, while an en-suite room will cost between £170 and £196 a week.

Another developer, Infrastructure Investment, was granted planning permission last month by Islington council for student halls on the corner of Goswel l Road and Wakley Street.

The 136 studio rooms, for students at nearby City University, should be ready in 2010. They will range from 14.7 sqm to 24.9sqm and feature flat-screen televisions. The halls will have a 24-hour concierge and free bicycles.

Increasing numbers of students, particularly foreign students, opt for purpose-built accommodation, which offers higher standards than traditional student flats or houses.

The credit crunch has cut construction costs and site prices. The combination means student housing is providing better returns than residential property.

Undergraduate developments have seen an average annual return of 12.2% in the past three years, compared with 9.7% for buy-to-let residential property, according to Knight Frank's figures.

A spokesman for Knight Frank said: 'The education sector has historically been more resilient to the general economic cycle than mainstream property sectors. It is relatively low risk.'

Source: ' thisismoney '

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