Is it worth investing in the Southampton Student market?

When I talk to new and existing landlords about the Southampton property market you have to touch on the student market at some stage - after all we have over 35,000 students here in Southampton. Invariably the question arises - "should I invest in a student property?". Well like any investment you need to do your homework. Here are some quick facts to get the mind going:

1. There are now over 9000 purpose built student rooms in halls or private operators
2. Our students numbers have remained reasonably consistent over the last number of years despite fees going to £9000p.a.
3. The number of overseas students has increased over the years.
4.  A lot of overseas students prefer to let in the professional sector i.e. one or two bed flats
5. As a result of the above there is overcapacity in the sector and this has resulted in downward pressure on prices.
6. Landlords who haven’t invested in their stock can only compete on price.
7. At the start of the last academic year there were numerous student properties vacant.

So not too pretty a picture but there are still a lot of students who need accommodation and good well managed property will let and we have loads of existing landlords who are in that space. But would I buy one now? 

Well this 3 bed semi-detached house has just come on the market on Belmont Rd. It is well located close to Portswood and could service both Solent and Southampton Universities. Tenant demand would be strong.
 

The property has the all-important C4 use and as it is located in the Portswood Ward it would be subject to the additional licencing requirements of the City Council. Assuming the property gets licenced for 5 bedrooms your monthly rental income would be £1625 or £19500p.a. This property is on the market at £290k and would therefore generate a gross yield of 6.7%. 

Is that yield enough to tempt me into the student market, the answer is no. The tenant risk is greater, your wear and tear is higher and you can get 5.5% on professional lets so why take the extra risk for a marginal gain!

If you are considering investing in the Southampton market be it professional or student, please do give me a call and I will gladly take you through the pros and cons of all aspects of the Southampton rental market.

If you are in Southampton on the 19th of May please do join us for our Buy 2 Let Seminar that evening. You can reserve your complimentary invite by calling us on 023 8001 8222 or emailing us at southampton@belvoirlettings.com