The student property market has been one of the most vibrant and well performing asset classes found anywhere in the UK over the course of the past few years. Strong investment amounting to more than £3 billion per year over the last five years, coupled with increasing volumes of people applying to UCAS year after year has meant more development, stronger returns for buyers, and a better quality of home for students.
One of the real drivers of this mutually beneficial relationship, however, has been international students. Those from the Far East, for example, often come to the UK with a lot of money to spend, and as a result will rent homes that give them everything they want, with their desire for comfort and quality outstripping the need to budget.
However, the UK is in the midst of a period of political uncertainty which threatens this fantastic relationship between students and investors. As the Brexit negotiations are ramped up, there’s a threat that the UK government will include changes to immigration regulations and visa conditions, which many fear will lower the number of students coming into the UK from overseas.
This could be potentially damaging for a property market that relies on overseas students to help it tick over, particularly in some areas of the country. For example, one of Scotland’s best performing universities, St Andrews, sees 47 per cent of its students come from overseas, while Warwick and Sussex, also high performers, welcome 34 and 33 per cent of their students from other countries respectively.
Since Brexit was voted for last year, there has already been a fall in the volume of students who are coming into the UK from other countries, with the The House of Commons Education Committee reporting a fall of 7.4 per cent in the last year as many people who would have applied were turned away thanks to their own fears about what the UK leaving the EU would mean for their immigration status.
And now, even as the UK looks to leave the EU, it could be that even just sentiment among people from overseas is enough to see them decide to look elsewhere other than the UK, damaging the prospects for investors in student properties in cities where there have traditionally been high numbers of overseas students coming to live and study in the UK.
The good news, however, is that even as the UK negotiates its exit from the EU, it’s important to remember how the student market normally reacts to adversity, and see this is as potential positive for the years to come.
When the coalition government introduced the £9,000 per year tuition fee back in 2012, there was an immediate dip in the number of people applying for universities, but UCAS data shows that ever since, there have been consistent rises in student numbers in the UK, which has taken it to all-time highs.
What this shows is that even if there is a period of uncertainty in the market around the Brexit conditions, the student market in the UK is so strong it tends to rebound in the years after a big change. And with the government likely to err towards protecting the rights of EU citizens in the UK, it’s more likely than not that property sector for purpose built accommodation would not see all that much of a fall in the years to come.
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This article has been provided by Experience Invest, a London-based UK property consultancy that specialises in high yielding student accommodation investments. Click here to find out more information about their latest high yielding opportunity, Aura Student.