Changes expected in student housing market, investors warned

While investing in buy-to-let student housing remains popular in the property sector, due to the high returns and low risk offered by greater demand than supply, experts are warning investors that a number locations may decline in the wake of the 2012 funding reforms. These are expected to lead to a drop in the numbers of further education students, along with an increase in those opting to live at home while studying, for financial reasons.

At present the need for student accommodation vastly outstrips that available in almost all university towns and cities, but research undertaken by property agents Savills, indicates that funding reforms will lead to some of these places being more badly affected than others, because of the reforms and the inability to secure sufficient overseas students, something which improves the international standing of a city.

“It is hugely important for developers, investors and funders in the student housing sector to understand that there are some towns and cities that now present a high risk and are likely to significantly underperform in the future,” said Yolande Barnes, for Savills.

They are advising investors to research a number of factors, including range of courses offered, the level of international students and the likelihood of merger or closure of institutions before deciding which areas to purchase property in. However, other agencies are more sceptical of the impact of the funding reforms, arguing that the UK remains one of the most popular places to attend university; ensuring demand will continue to outstrip supply.

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