Purpose Built Student Accommodation PBSA – What Is It?
Student property is an investment type that has come to the forefront over the past few years, powered by the UK’s higher education and an increase in student numbers. One of the most popular forms of student property is PBSA, quickly overtaking the previously popular HMOs.
But what is PBSA housing? And are they a good investment? We are going to look at all things to do with PBSA housing, how they compare to other investment opportunities, and how we can help you start your investment journey today
Discounted property with high yields
Transparent & honest throughout the process
We’re property experts with years of experience
Investment opportunities tailored to your requirements
WHAT IS PBSA HOUSING?
Before we look at the pros and cons of investing in PBSA, we will first look at what it is. PBSA, or purpose built student housing is exactly what it sounds like, it is student accommodation that has been built for the purpose of housing students. It is one of the most popular investment types in student property due to its popularity with both the domestic and international student populations.
Purpose-built student accommodation usually includes amenities such as communal workspace areas, building management and security, strong wifi, gyms, ensuite, and other benefits.
ARE PURPOSE BUILT STUDENT ACCOMMODATION A GOOD INVESTMENT?
Yes! Purpose-built accommodation is a great investment opportunity. Whilst there has been talk of property price drops throughout 2023, the market seems to be bouncing back. According to the Nationwide Building Society, property prices have increased 0.5% in April.
Property prices are not the only ones on the rise, as rent has also increased in price. According to the HomeLet Rental Index, the average price for rent in May 2023 was £1,213, which is up 10.0% annually.
This combination paired with the rising student numbers means that the demand for purpose-built student accommodation has skyrocketed over the last few years.
What is a good ROI for PBSA property?
Start your property journey today
Start your property journey today
BENEFITS OF PBSA
As with any investment opportunity, there are pros and cons to PBSA. Below, we are going to take a closer look at some of the benefits that investing in purpose built accommodation brings:
Because PBSA properties are built for students and are often multi-storey, they often require less ground space. Because of this, they lend themselves well to prime city centre locations, leading to a higher ROI, capital growth and yields.
Another benefit to PBSA investment is that it is a strong sector to get involved in. Despite the hurdle that the 2020 academic year brought, PBSA had a record-breaking year, with GPB 5.77 billion of investment.
PBSA is designed by nature to appeal to the student market, kitted out with stylish designs and great amenities, meaning that students are willing to pay extra for.
PBSA also tend to have a higher retention rate than that of HMOs. This is because PBSA tends to offer a slightly more luxurious lifestyle, as as a result have a more positive experience for the students. They tend to create a stronger sense of community that encourages others to stay for longer.
If you invest off-plan in pbsa, then you can often benefit from below-market rates.
More often than not, when you invest in PBSA, it will come with a management team, security, and maintenance. This helps to take a lot of the stress out of investment
When you invest in new properties, many credible developers will offer a rental guarantee period, this will reduce your risk of investment whilst the development establishes it
Cons of investing in Purpose-Built Student Accommodation
As with any investment opportunity, PBSA also has its disadvantages. Below we take a closer look at some of the disadvantages that purpose built student accommodation can bring;
Unfortunately, there is no option to take out a mortgage when it comes to PBSA investment, you will have to be prepared to pay all of the costs upfront.
Whilst PBSA will usually generate a higher rental yield investment, the capital growth may not be quite as high, but this is to be expected. But this is to be expected as it is generally cheaper to purchase than residential property is.
THE DIFFERENCE BETWEEN HMO VS PBSA
When it comes to investing, there are two main ways that you can get involved. You can either start with an HMO or with PBSA.
An HMO is a house of multiple occupancy, and is a popular investment choice, as many second and third-year uni students are looking to live off campus. In recent years though, PBSA has risen to the forefront of student property.
HMOs also bring with them many stringent laws and legislation, which can differ from local authority to local authority. This can make it confusing to get your head around, even if you are a seasoned investor.
When it comes to houses in multiple occupation, there are two main advantages to investing that you do not get with PBSAs. Below we take a closer look at the pros they bring:
Cheaper: One of the biggest advantages of HMOs is that they are a much cheaper investment than a PBSA and owners are able to rent out individual rooms to multiple tenants.
Secure: Another advantage is that should one tenant decide to move out, you will have the added security blanket of the other tenants to be able to rely on.
Whilst they may have two main advantages over PBSAs, there are also cons to this vessel of investment:
No management: Student houses of multiple occupancy are a more hands-on investment, due to the lack of management that is involved. Whilst you can hire a letting agent to do some of this work for you, this will eat away at your final profit.
High maintenance costs: HMO properties usually tend to be older and usually a little lower in quality. This makes them generally more expensive to maintain and more likely to run into issues.
Investors’ legal duties: Due to the ‘The Licensing of Houses in Multiple Occupation Order 2018’, more properties will be required to be licensed for the protection of their tenants, meaning owners get extra legal responsibilities.
Lower demand: Student standards have shifted over the past few years, with many on-campus students looking for an alternative to the usual HMO. This is partly due to the COVID-19 pandemic. HMO tend not to offer the same wide range of amenities that PBSAs do, meaning they are seeing a decrease in popularity.
Difficult to secure a mortgage: As is the case with all student property, it can be difficult to secure a mortgage on a HMO property compared to a standard residential property.
Start your property journey today
Start your property journey today
WHAT TO CONSIDER WITH PBSA INVESTMENT
If PBSA is an investment opportunity that you wish to part take in, then there are several factors you will need to consider when looking at the development of new PBSA. Below, we take a look at what you will need to consider when getting started with PBSA development:
- A strong range of universities with on-campus students
- High number of domestic students and international students
- A city with the opportunity for a good student experience
- Good employment opportunities
- A promising graduate retention rate
- Nightlife opportunities
Best place to invest in the PBSA market 2024
Another aspect that you will need to consider is where you will locate your purpose-built student accommodation. As we have already mentioned when looking for cities to invest in, you should only consider cities with high student populations and with strong rental growth potential.
Because of this, the best cities to invest in are most likely:
- Liverpool
- Manchester
- Leeds
- Sheffield
- Nottingham
- Cardiff
- Birmingham
- Newcastle
- Edinburgh
- Brighton
WHAT ARE OUR BTL OPTIONS?
These tend to be normal residential houses, 2 to 3 bedrooms terrace, semi-detached, detached or flats.
They are houses that are suitable for the average renter and are sometimes known as vanilla buy to let properties.
A House of Multiple Occupancy (HMO) is a rented property occupied by at least three people who are not from one household or five or more people, forming two or more households.
This type of Buy To Let is a freehold block which offers multiple, separate or independent residential units.
This can be a variety of different types of property such as blocks of flats or houses converted into flats.
This is very similar to HMO’s and even are often referred to as non-licensable HMO’s.
They have many characteristics of a typical HMO but don’t require the licence, but they may still require planning permission from your local authority.
As the name describes, this is a commercial premises and it is when you let the property out to one or more businesses.
It’s often referred to as Commercial Landlord Mortgage, Business Buy To Let Mortgage or Commercial Investment Mortage.
OUR LOCATIONS
Thinking of buying a BMV property, but have a specific area in mind? To give you an understanding of just how broad your property choice is, here’s the areas where we most regularly buy BMV property…
Start your property journey today
Start your property journey today
EXAMPLES OF PROPERTY INVESTMENTS
Have we got your interest? Well, how do you know that we’re going to provide great deals? Just take a look at some of our recent sales in the area, they speak for themselves!
Want to see more of our deals? Check out our recent deals.
Buy Refurbish Rent Refinance
Scunthorpe, DN16
House, Semi-detached Freehold
25% BMV
Yield
8.3%
- Freehold
- Driveway
- Rear garden
- Close to local amenities and transport links
- Could achieve £700 – £750 pcm
- Vacant upon completion
Buy Refurbish Rent Refinance
Scunthorpe, DN16
House, Semi-detached Freehold
25% BMV
Yield
8.3%
- Freehold
- Driveway
- Rear garden
- Close to local amenities and transport links
- Could achieve £700 – £750 pcm
- Vacant upon completion
AirBnB
Bakewell, DE45
House, Terrace Freehold
22.1% BMV
Yield
15.2%
- Freehold
- Grade II listed
- £51,000 per annum gross rental
- £200 nightly average
- 70% predicted occupancy
- RICS £420,000 in current condition
AirBnB
Bakewell, DE45
House, Terrace Freehold
22.1% BMV
Yield
15.2%
- Freehold
- Grade II listed
- £51,000 per annum gross rental
- £200 nightly average
- 70% predicted occupancy
- RICS £420,000 in current condition
Refurb to Flip
Tadley, RG26
Bungalow, Detached Freehold
45% BMV
Exit Profit
20%
- Freehold
- Refurb opportunity
- RICS value £300,000
- Strong demand from owner occupier
- Great transport links
- 50 Miles from London
Refurb to Flip
Tadley, RG26
Bungalow, Detached Freehold
45% BMV
Exit Profit
20%
- Freehold
- Refurb opportunity
- RICS value £300,000
- Strong demand from owner occupier
- Great transport links
- 50 Miles from London
Buy To Let
Bradford, BD12 7DE
House, Terraced Freehold
24.3% BMV
Yield
10.8%
- Freehold
- 4.1 Miles to Bradford City Centre.
- 1.5 Miles to M606 & M62.
Buy To Let
Bradford, BD12 7DE
House, Terraced Freehold
24.3% BMV
Yield
10.8%
- Freehold
- 4.1 Miles to Bradford City Centre.
- 1.5 Miles to M606 & M62.
WHY SHOULD YOU INVEST WITH US?
We’ll find you the best deal, with the highest yield possible, tailored to your requirements.
We have years of experience in this industry and are part of a group of companies that regularly purchase properties for below market value, in which we can pass the discount on to yourself. We’ll look at every property we purchase, or even get an enquiry for, to determine if it will offer a high yield. If the answer is yes, we can pass the opportunity on to our investors.
We make it easy, doing all the research for you & finding the perfect property to slot into your portfolio.
WHY SHOULD YOU INVEST WITH US?
We’ll find you the best deal, with the highest yield possible, tailored to your requirements.
We have years of experience in this industry and are part of a group of companies that regularly purchase properties for below market value, in which we can pass the discount on to yourself. We’ll look at every property we purchase, or even get an enquiry for, to determine if it will offer a high yield. If the answer is yes, we can pass the opportunity on to our investors.
We make it easy, doing all the research for you & finding the perfect property to slot into your portfolio.