Selling Student Accommodation

On the surface at least, student accommodation investment seems like a great idea. You buy a house close to a university campus, divide it up into separate rooms and then rent it to a bunch of students for a tidy profit. Result! Only is it?

During the COVID-19 pandemic, the student lettings market didn't exactly thrive, and it led to a struggle for investors in this particular sector, with many looking for a swift exit.

The landscape has since changed, and student accommodation is in high demand with CBRE a commercial real estate leader, stating, "Based on current projections, there are only around 59,000 beds likely to be delivered by 2029, which could lead to a potential shortfall of up to 620,000 student beds."

So, what's the problem? Well, it could be to do with the issues that student lets bring, or more likely the Renters Reform Bill at a time of increased mortgage rates and falling house prices, leaving little option.

We get it, it's a tough time to be a student property landlord, and we might have a quick solution for you.

Table of Contents

• Is selling your student accommodation unit easy?

• Why should you sell your student accommodation to us?

• The various types of student accommodation

• How much is my student accommodation worth?

• The pros and cons of student accommodation investment

• How to increase the value of your student unit

• The future of student digs: will values drop?

• How to sell student accommodation FAST!

Is selling your student accommodation unit easy?

Not really, at least not in the traditional sense.

Selling a standard residential property, or even Buy To Let, you would typically go to an estate agent who would list it on portals like Rightmove or Zoopla, but the audience for your specific unit is going to be relatively slim there.

You have a much smaller pool of buyers to appeal to, typically investors, or cash house buyers like us. That has its pros and cons, it means that the potential buyers you're dealing with understand the market and the type of property specifically. however, they are savvy, and investors will always be looking for a good deal, and that means a discount.

Why should you sell your student accommodation to us?

That leads us nicely into why you should sell to us. We are extremely well placed to purchase your student property, as not only are we cash buying specialists who are able to purchase the unit directly, but if it doesn't quite work, we also have a significant network of thousands of investors who have an interest in this specific property type, that we can market to.

You can find out how our service works, but also do feel free to get in touch with us directly to discuss our options in more detail.

That audience that you need to access is just a short enquiry away.

The various types of student accommodation (outlined)

Just like any investment, student accommodation doesn't just come in one type - there's various.

All of which come with their own set of quirks and features, that not only dictate the type, but also the amount of investors who're eager to buy them. It's also a major factor behind the price they're willing to pay too.

So if you're selling student accommodation but having no luck, here's a rundown of the main types of student housing...

• PBSAs

Purpose build student accommodation is much like it sounds. That built with the sole purpose of housing students.

PBSAs (otherwise known as pods) are usually sold as part of a block and are marketed to investors on the basis that they'll achieve a guaranteed rent for the first X amount of years. Sounds great, until you realise that to sell a PBSA you need to track down a VERY specific kind of buyer - usually one that's cash-ready and willing to take a risk.

Hence why their value when sold on tends to be far lower than what was originally paid.

FYI: All that really means is that the guaranteed rent promised by the developer is actually paid for by you.

A downside of being overcharged. One of the reasons why even cash buying companies like ourselves won't touch pods.

• BTL student accommodation investments (HMO)

Think of these as your more traditional student let. Essentially a Buy To Let for students, which has been for years, the favoured route for most investors.

Now, while these could take any form, from a flat right up to a one-bed house, the most common is an HMO.

Why? Because out of all the student lets out there, they typically tend to deliver the best yield. And that's despite BTL regulations around HMOs becoming a lot stricter over the past 20 or so years.

How much is my student accommodation worth?

At the end of the day, the value of student accommodation is somewhat similar to a normal property in the way it's only worth as much as someone is willing to pay.

However, with that being said, there are a few more factors that go into valuing your student accommodation that you wouldn't typically consider in a residential valuation.

But the real secret to getting the value you want, is tracking down the right buyer (which of course we can help you with!)

Your student unit will have a base price for the actual property, but the factors we mentioned that you need to consider will also have a significant impact on the valuation... so what are they?

• The level of demand

An empty property comes as a financial burden to any investor, so the demand for tenants in the area is going to be high up on their list of priorities.

So, if you're selling a BTL in an area with high tenant demand, then you could expect to achieve a healthy price.

Remember, even sitting tenants are of value to investors (providing their well-behaved of course), so eviction may not even be something you have to do.

• The potential yield

In the end, there's only one reason investors dabble in student accommodation, and it isn't as a goodwill gesture. Nor is it for student wellbeing.

You see, much as you'd expect, every investor's end goal is to multiply their money.

All of which makes any property with a low potential yield worth less, and may even be enough to put them off a purchase full stop.

• The amount of capital appreciation

Aside from rental income, any eagle-eyed investor also takes into account how much student accommodation has appreciated, especially if the property's in an area where house prices are particularly high - London, for instance.

The reason is that a 1% increase on a property in London could bring in as much profit as a 5-10% increase on a property up North (far less likely to happen). So as long a property prices remain on the up, for an investor it's more of a secure investment.

You can find a full definition of capital appreciation on Investopedia.

• It's use & purpose

A factor not to forget with an investment property is how usable it actually is. If you're selling student accommodation that's got an awkward layout or is just unusual, then you're likely to be inundated with offers by investors.

Reason? Student living has changed. Unlike during the 80s and 90s, when students would simply be on the hunt for a room, the modern student is after a whole lot more.

Because the majority of universities have since built ultra-mod PBSAs, students now look for a well-sized room, take into account how it's furnished and are particularly in favour of en-suite bathrooms.

• The amount of car parking

Speaking of the modern student, a lot (especially post-COVID) are now choosing to use their own car.

Hence why properties that don't provide at least some form of parking can be at a major disadvantage. As we're sure you know, investors want student properties that are rentable, so if yours doesn't have easy access to parking (or it comes at a cost), then its appeal could plummet. A driveway would, of course, be major kudos.

• Internet and the level of tech

Tech plays a significant role in a student's studies, which is why a strong internet connection usually sits high up on a student's list of 'must-haves'.

Another one of the hurdles that comes with renting to Gen Z.

• Ease of maintenance

With students not being the tidiest of tenants, nor the cleanest, if a property boasts low maintenance outside space, investors are far more likely to see the green light.

After all, student accommodation is a hands-off investment, not a bind. So if a student house had a garden that needed regular maintenance, the landlord would probably invest in a gardener just to keep the tenants quiet.

Yet another yield-eating cost that'll cause them to see your property in a less favourable light.

• Where it's positioned

It's no secret that students favour convenience, which explains why properties near or on campus are some of the first to be snapped up. In other words, they're in the most demand.

Demand that comes as a HUGE value to investors, especially when it can often be the reason tenants choose to re-let the house year-on-year.

Although it's not just how a property's location corresponds to the Uni that can dictate its value. Access to food, leisure and nightlife also plays a large part.

Pros and cons of student accommodation investment

Just like all investment strategies, student lets have their ups and downs.

Therefore, what any potential buyer is going to do is weigh up the pros and cons - i.e. see how your property can help them maximise the pros and minimise the cons.

So just refresh your memory as to what'll be going through their heads during a viewing, here's a few of both the pros and cons of student accommodation investment...

In other words, both good and bad points to make on a viewing. So think of this as viewing prep.

How to increase the value of your student unit

If now you've come to realise why your student accommodation investment may not sell, or isn't selling on the open market, then knowing how to up your chances wouldn't be a bad idea.

So before getting irate with your agent or submitting your house to auction, be sure to check out these couple of tips on how to boost your property's appeal on the open market...

• Up the number of rooms

The value of a student let is largely determined by the number of rooms it boasts, as student houses are usually rented out on a room-by-room basis - in other words, a HMO.

So, by re-assessing how the space is divided, you could rework the layout to make the best use of a all the space you have.

Something that could enable you to create another bedroom or an additional section of communal space.

You could even go to the extent of converting your loft space, or eating some square footage out of the bathroom.

Now of course, there is the cost of these to bear in mind; however, if investing a couple of thousand into home improvements can secure you (A) a sale and (B) a higher sale price, then we'd say it's well worth looking into.

FYI: Before adjusting your room sizes, you need to be clued up on the legal regulations that come with adding a bedroom. Discover what they are below...

• Maximise Rental Rates & Yield

You might be reluctant to increase your rate, or even not able to - but if you are looking to sell, then it's definitely something you should consider.

If you are offering under the market rate and feel like you can raise the rents, then it will increase the yield, and these properties primarily sell based on their yields.

Showing that you can get a higher return will, in turn, increase the value.

• Fresh Decor & Maintenance

We've alluded to it a lot in this article, but student tenants don't typically leave properties in the most pristine condition. If you are able to in the void periods, you should look to do some small renovations to the property to make it more appealing - it may be the difference between fetching a slightly higher yield than similar student accommodation on the same road.

The future of student digs: will values drop?

This is a really hard question to answer - when we previously re-wrote this page during the COVID epidemic, then we pretty much said yes.

The landscape is a little different now, but it's at quite a pivotal time. The government are doing all they can to raise costs for landlords making it a much less exciting prospect, but on the flip as we mentioned earlier, there is a significant demand for student accommodation that needs to be fulfilled.

Keeping that in mind, we're going to have to sit on the fence on this.

How to sell student accommodation FAST

Selling student accommodation isn't easy, as you can probably imagine, with low numbers of students and BTLs being priced out of the market by more PBSAs.

Having a house in a student area and it's likely you won't have the desire of homeowners on your side either, as student areas aren't what you'd call the most desirable; they're more hubs for investment than anything.

Ones that in which it's quite hard to secure a sale, unless of course they're brimming with demand. So, how do you sell a student accommodation investment fast?

Well, you could of course approach an estate agent, although that'll be a lengthy process, as well as a waste if demand isn't there.

Not only that, but it'll cost you a lot too, even if you do sell with estate agent fees and conveyancing costs.

Then of course, you could chase a quick sale and go to auction, although that's going to come with a large element of risk, as with an auction you're not guaranteed to sell.

Neither do you avoid costs. In fact, you'll arguably have to foot even more!

Sell through auction and there'll be a marketing fee, listing fee and commission to pay on the sale too, which is typically similar to that of an agent at around 2%.

Or you could avoid doing any of that and sell your student accommodation investment for CASH in just 7 days. Sound appealing?

As an industry-leading cash buyer of property, we can help you do just that.

Our team have over 50 years' experience in buying homes, so you could call them 'we buy any home' experts. What's more, they're also generous; sell your property to us and we'll even cover the costs of your solicitors and surveyors.

And if all that isn't enough, we're not exactly picky.

We buy ANY house in ANY location in ANY condition. So, be your BTL in showroom spec or a tad on the tired side, we'll make you an offer.

Frequently Asked Questions