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Article > Student Property - A route to long term Financial Freedom?

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We all know that without investing your money in assets, you will always be exchanging your time for money and who wants that ? Especially when the reality is that you may have to work until you are 65 or even 70 just to be able to fund your retirement. The state pension is not what it used to be and people are growing increasingly worried as to whether they will able to afford to retire at all.

During the 90's Britain experienced a buy-to-let boom and property became an increasingly popular investment for lots of ordinary people like you and I. Mortgages were readily available and thousands of fledgling investors joined the buy-to-let boom with the dream of retiring and sailing off into the sunset.

Unfortunately for quite a few of these novices the reality was that they bought over priced properties in the wrong area that had no cash flow and very little chance of increased equity as they had already paid too high a price to buy the property. For a lot of these investors it was only a matter of time before the bubble burst and the bailiff came knocking. Mark Hobbs, founder of StudentDigz, has witnessed first hand how a perfectly intelligent gentleman (albeit a naive investor) who had a great career in a very well paid job got gobbled up into the buy-to-let boom. He left his job, got bad advice, bought the wrong properties, which were mortgaged up to the hilt, had more bad advice and started buying plots of land with a view to building houses. Eventually, not only did he lose the investment properties but also the plots of land with half built houses on and, worst of all, his home. I had watched someone go from earning 80 - 100k a year to claiming Benefits in the space of just 5 years. “I could not believe my ears the day he walked into my office and asked if I had any jobs available”, Mark Hobbs says.

However, it wasn't all doom and gloom. Many savvy property investors quickly noticed that there were certain "golden nuggets" amongst the many property assets available, one of which was, and still is, the Student Property sector. But why is that?

Student lets are high-yielding and in demand

The main reason why investors like to invest in student accommodation is because it is generally higher yielding than the rest of the private lettings market. With a student property you can achieve a much higher monthly rent, so cash flow can be very good. As with any property, you have to make sure you buy the right property, in the right area, at the right price. As a like for like comparison you can compare two properties of the same size in the same street but the property that is ready for let to students will always rent for a much higher amount due the nature of having a number of individuals paying rent, as opposed to a single family. It is likely that you will pay more for the student ready property, but in my experience if you shop around you can find properties that are only 10 - 15k more than a similar residential family home, but over time the student property will earn you a great deal more in rental income, if not also in equity.

More experienced investors with funds available tend to buy a property in the right area at a much lower price and carry out the student conversion themselves. Mark Hobbs says "A student property conversion should only be carried out by an experienced investor unless you have the ability to use an advisor, like ourselves, to oversee and advise throughout the process. There are a lot of regulations and red tape to negotiate when converting a property for rent to students but it needn't cost the earth if you know what you're doing".

Rising Student Numbers and Rising Global interest in the UK higher education system

Although there has been a slight dip in the number of students following the restructuring of University Tuition fees in 2012, UCAS, the University admissions body, has recently announced a new record high of 495,596 students entering full-time higher education in 2013, a 6.7% increase on 2012 figures.

Additionally, it is no secret that there has been a rising global interest in the UK’s education system due to its world-class education, research and innovation and its internationally recognised qualifications. Over the past few years there has been a drastic increase of students who come flocking from all over the world and can pay up to £20,000 per annum in tuition fees, depending on their student status. Non-EU students in particular are willing to pay these prices as they know that a degree from a UK University will often secure them higher paying jobs back in their home countries.

“At our StudentDigz branch in Swansea, we have housed well over 16,500 students over the past 13 years of which many are now from countries such as China, Saudi Arabia, Nigeria, Pakistan, Russia, and India. The UK really has become a global hot spot for international students”.

It is important to note that international mobility is often due to programs such as the Erasmus program, a student exchange programme established in 1987 by the European Commission to facilitate the exchange of cultures and languages, or other direct partnerships between Universities around the world. The directors of StudentDigz (Manchester), Edouard Clark and Dilan Omari, can easily relate to this phenomena as they have lived in Brazil, Germany, France, South Africa, the UK and the USA during their time as students and as long as these programs and partnerships exist between the Universities, and the British education system keeps its prestigious position in the world, there will always be international students that strive to study here.

Mark Hobbs adds “My experience is that the numbers of international students studying here and renting properties from us is growing year on year. This confirms that the UK University Degree is seen as a valued commodity and whilst that remains the case it can only mean a positive outlook for student property investors”.

Fixed-term tenancy and Cash-flow planning

“Another advantage of investing in student property is that the properties mostly rent out under fixed-term tenancies for a length of 12 months and many students reserve their property as early as November or December for a move-in in September of the following year”, says Dilan Omari, ARLA & Director of StudentDigz Manchester. “This not only facilitates cash-flow planning for you as an investor, but it also gives you enough time to find new tenants”.

What you should know before investing in student property

It is important to know that the profit you can make from student property can be exceptional, but it is also important to know that actually letting and managing a student property is another topic altogether. It is not only hard work but also very time consuming. Especially when you are dealing with young Students who are often away from home for the first time, and of course when dealing with their Parents, who quite naturally, are very protective of their youngsters.

Then, in addition to the pressure of having to fill your rooms year after year, you also need to think about all the legal paperwork, the protection of your deposits, your inventory, your rent collection, your interim inspections, your maintenance repairs, the lost keys, the out of hours calls - and of course, the dreaded arrears!

But it doesn’t stop there. If you own a HMO (House in Multiple Occupation) it becomes another whole different ball game. For example, you have to ensure your property has a multitude of certificates in place and that you follow The Management of Houses in Multiple Occupation (England) Regulations 2006.

And if you are like most people and you have a full time job, you may not always be in the position to deal with the demanding day-to-day management of your property. Besides, you probably chose to invest to make money, not to end up getting tired and stressed out because you have to deal with all the responsibilities that come with managing your student tenants.

Don’t fall into the trap of letting your investment property manage you

Find an agent who can help you leverage your time and investment and who specialises in the management of student properties and HMOs. If you had a toothache you wouldn’t go to your local Doctor would you? He could numb the pain for a while but really you should have gone straight to the Dentist, as that’s what he does all day every day and he is the specialist in the field.

Same rules apply for the management of your student property. A student letting specialist, like StudentDigz, understands what is required by student landlords and students alike. Mark Hobbs knows that “Managing a residential family home is completely different to managing a student property that has anything from 2 to 12 young student tenants living under the same roof. We have therefore adapted our systems and tools over the past 13 years to make sure we deliver a service that is best suited to the student market”.

An example of this is that students will not search for properties in the same way as someone who is looking for a residential let. They will use different methods and different media and what is an important selling point for a student when looking for a their next digz is sometimes not even a consideration for a residential tenant.

If you would like to find out more about how StudentDigz can help you manage and let your student property in either Swansea, Manchester or Salford, don’t hesitate to call 0161 312 2544 (Manchester Office) or 01792 600 227 (Swansea Office)!

About StudentDigz


StudentDigz has been an established student letting specialist for over 13 years in the University City of Swansea and has already housed over 16,500 students to date. To serve even more student landlords, like yourself, StudentDigz is now also available in Manchester and Salford.

If you want a property management agent that truly understands how to make your student property investments manageable, then please visit:


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