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Student Property Investment

With a booming student market in Liverpool it is essential for any potential buyer or seller to understand both the existing market, and potential future movements within that market. We have extremely close relationships with all of the universities in the city. This, coupled with our extensive market research, puts us in a strong position to advise potential clients in a structured and informative manner. Thereby ensuring maximum returns.

City Residential is the most active agent in the city centre in letting and management student schemes.

For further information on this service contact our Managing Director Alan Bevan on 07970 498187 or at [email protected].

The Quest to Invest – Liverpool’s Student Market

Liverpool’s internationally renowned quality of life and friendliness and the excellent higher education on offer has had students from across the UK and overseas flocking to its three universities and other knowledge assets.

In 2015 the Liverpool Echo estimated the city’s student population to be around 50,000. Within four years new estimates put that figure closer to 61,000. That’s roughly equivalent to the population sizes of Bury and Margate and bigger than Durham and Canterbury.

For the young adult embarking on their first venture from home. It’s an extremely affordable place in which to study, and has a nightlife second to none. According to Studenthut, Liverpool is in number two in the UK’s top student cities and has rarely been out of the top three.

What this means is that Liverpool is also very appealing to those looking to invest in the student housing market.

Finding those Students

Our advice is unequivocal: employ a good lettings agent, somebody who has good local knowledge and is on top of compliance and changes in regulations. City Residential manages around 600 properties in Liverpool and are experts on Liverpool’s housing market

There are landlords across the country who don’t look after their tenants. And some of the biggest issues in poor quality accommodation and rogue landlords are in the student sector. If you are looking to become a student landlord then you should use an agent like ourselves, who are accredited by Liverpool Student Homes. That’s not to say that those who aren’t part of that can’t deliver a good service, but there are plenty out there who don’t.

Risk and Reward

There are two ways to invest in the student market. Firstly, properties that are either purpose-built student accommodation (PBSA) or converted purely for students as well as HMOs. And then there’s residential properties that are let to students.

For the investor, the traditional market entry has been to buy a HMO or a student specific property outside of the city centre. Many investors are attracted by high numbers of people looking for accommodation, high yields of around 8 or 9% and being able to earn more from a student’s 42-43 week requirement with defaulting being rare.

It’s tried and tested. But then came Covid-19. Across the UK, students stayed away and HMO landlords struggled. That’s often the trouble with high rewards; there’s a complementary risk.

Alan said the pandemic has sent out a warning for the future: “Covid has shown that you can’t underestimate the risk because no one saw that coming. If there is suddenly a change in the market and you have something specifically built or refurbed for that market then you might be confronted by the risk you took on.

“It’s great investing with students in mind, but it’s eggs in baskets and there are dangers, especially as there could be scenarios where students don’t attend university physically. If you are in that student market and you buy a terraced house that is split into units and the intake doesn’t happen in one year then your income is impacted and it will be difficult to fill them having no appeal to a young professional.”

With the squeeze of stock availability and rising prices in the suburbs, perhaps a wiser choice currently is to keep options open by investing in a residential property that is suitable for a wider demographic – students and young professionals or even young families.

“It’s something we would recommend,” said Alan. “If you buy an apartment in the city centre that is in a good location which you could rent to a student or a professional then you can decide who occupies it. The yields are still good too at around 6%”

The message is clear: don’t go out and buy student specific property at the moment, with Covid-19 not having been banished.

City Centre Living

Another potential issue with student specific accommodation is that traditionally it has been located in the suburbs – like Wavertree and Kensington in Liverpool – but with the social media savvy undergraduate now lured by the bright lights at the heart of the city, landlords’ income can be more precarious.

Most students want to be in the centre and have excellent access to all it has to offer. Formerly that was less the case – non-fresher students would excitedly head off on their mid-course out-of-town adventure – but as Liverpool’s appeal as a tourist destination has grown these young people want to be closer to the action.

Liverpool’s city centre population is as high as it’s even been standing at around 48,000 and of these there are some 15,000 students who live in non-student specific properties wielding a huge influence on the market in August and September every year.

Alan believes that European Capital of Culture in 2008 changed perceptions of the city while Liverpool ONE helped to transform the experience, both helping the market to mature with an improved mix of city centre living options.

He said: “By investing in city centre accommodation you are investing in the city as well and Liverpool is a great place to invest in student properties for the future, although it’s not an easy time to buy something.”

Another impact of Covid has seen tenants and buyers looking at renting/buying in the city because of the booming suburban market. High levels of stock to rent and for sale was soaked up by the increased demand.

Twelve months ago, a landlord could expect to realise £750/£800 for a two-bed apartment in the city centre. A year on there has been a 10% bounce. “It’s hard to get in but we are expecting a good steady market over at least the next 12-18 months and what is and becomes available will offer good value,” he added.

Today’s Market

City Residential manages around 600 properties in Liverpool and managing director Alan Bevan is an expert on Liverpool’s housing market having for years published a high-level quarterly update. “It’s been a great market in the last decade and even though Covid-19 has been a challenge, this year’s student in-take has been really good.

“There are still good levels of overseas students, but not at the levels we saw in 2019, yet demand has remained high because of students arriving who had deferred their university place in the wake of the pandemic.

“I can understand why anyone looking across the UK would select Liverpool as one of their preferred options to rent out to students. The yields are better in Liverpool than many other UK cities, it’s cheaper to buy and it’s a vibrant city with student numbers having risen dramatically. Yet like everywhere in terms of stock, it’s pretty full, because it’s also come at a time when the residential market has become very strong.”

The Future

Liverpool is no stranger to fluctuations in its fortunes, but there has been marked resilience over the last few months. Caution though is the watchword though. Covid might yet have another say and other factors might come into play. Political challenges caused a dent in reputation and a loss of confidence from big investment players and stalled developments.

Alan said: “It’s a positive to say that the development pipeline for student developments in the city has also slowed dramatically, hopefully allowing the supply/demand picture to improve over the next few years.”

The city’s marketing line is a great play to live, work, play, study and invest and that hasn’t changed – nor is likely to.

For further information on this service contact our Managing Director Alan Bevan on 07970 498187 or at [email protected].