The Benefits of Student Property Investment Through a UK Investment Pension

University places are in high demand and, with in excess of 2 million people enrolling each year since 2000/2001, so too are decent properties close to Britain’s many great seats of learning. Student accommodation is highly sought after these days, and investing in student property can be a great way to bolster your pension plan.

Unlike the standard funds and equities commonly associated with pensions, investing in property can be a great way to get your money to work for you and maximize your ROI. Property is usually held for a significant period of time and this can allow gains to flourish as yields in the housing market will commonly outperform other investments over the longer term.

Pension schemes also provide legal separation

Another benefit of holding property in a pension scheme such as a self-invested personal pension (SIPP) is that the scheme is regarded as a separate entity to the individual or any company associated with it. This means that should you or your company fall foul of any financial difficulties, your pension scheme would be protected.

Holding multiple assets in a SIPP is advisable, however, as the scheme would be liable to any ongoing charges should the single property be left unoccupied for a significant period of time. The beauty of investing in student property, though, is that this is unlikely to happen inside of term time thanks to the high demand. Higher yields will also cover the shortfall encountered for the out of term months, namely July and August.

Student property shows great resilience to market blips

Even those investing in student property later on in life through a SIPP can enjoy decent returns thanks to the stability of this section of the housing market. Student accommodation has proved to be one of the most unfaltering areas of investment over recent years, a record that takes into account the financial meltdown of 2007/2008.

It is the only part of the property sector to show increased annual returns across this period, a factor that cannot be understated. Pensions came under close scrutiny during the recent recession, with many retirees left out of pocket thanks to unscrupulous fund managers taking unnecessary risks with innocent people’s money.

A SIPP puts you back in control of your future, and by diversifying your portfolio with student property you are adding an element of stability without sacrificing the growth necessary to make a pension plan worthwhile.

Many lets will come with parental guarantors

Students themselves have also changed for the better, too. Gone are the days of the ‘Young Ones’ moving in and trashing your property. In fact, you will generally incur fewer problems from student lets than other sectors of the rental community.

Even if the worst should happen, landlords have grown wise to the potential problems and many now insist on parental guarantors to cover any damage done whilst their little darlings are in residence.

Buy-to-let student property looks set for continued growth

£3.98 billion was invested into the UK’s student housing market in the first half of 2015, an increase of over £1.5 billion from the same period in 2014.

This dramatic rise is largely due to investors viewing the sector as a better acquisition than standard residential buy-to-lets thanks to the perception that student accommodation enjoys greater yields.

Demand is outstripping supply

The final benefit of investing in student accommodation through an investment pension is the fact that occupancy rates are generally far higher than residential buy-to-lets. As touched upon earlier, student property is currently in extremely high demand, and this is a trend that is expected to continue for the foreseeable future.

Despite the rise in the amount of purpose built student accommodation over recent years, the demand for good property is still not being met. Add to this the fact that international student enrollment is on the increase – a section of the student population who are always looking for somewhere to stay while they study – and it is easy to see why this appetite for accommodation is not going to go away. All of these points make the student property sector one of the most alluring opportunities available for those looking to secure their future with an investment pension.

Feature image credit: Goodluz via 123RF

If you enjoyed this article then perhaps you would like to read “A Guide To Buy-To-Let Investments“?