Student Accommodation Investment: What You Need To know

Every year, around three million students across the UK pack their bags, hug their parents goodbye, and set off to start life at university. It’s an exciting time — new city, new friends, new independence — but one thing most of them have in common? They need somewhere to live.

From first-years moving into halls to postgrads looking for something a bit quieter, the demand for student accommodation is huge. In 2025, over 665,000 people applied to university through UCAS, including a record-breaking 328,000 UK 18-year-olds, and each one needs a place to stay. Most students spend the bulk of their degree living in Purpose Built Student Accommodation (PBSA), and that demand keeps growing.

For property investors, that’s a big opportunity.

Student accommodation has become one of the UK’s most resilient and consistent investment markets. Whether you’re just starting or looking to grow your portfolio, it can offer steady rental income, strong yields, and less risk of long-term void periods.

At Alesco, we have a range of high quality student property investment opportunities which are also high value due to their transitional nature. Our properties are suited to people who will go from students to graduates, and young professionals. Assets like these support long-term occupancy and are expected to reach close to 100% occupancy annually, offering investors consistent income and reduced risk.

Below, we’ll break down the pros and cons, what to expect if you’re thinking about getting into student property, and how Alesco can help make the process clearer/er and more rewarding.

What is student property?

Put simply, student accommodation refers to any residential property where students in higher education live, and there are four main types to know about:

1. Privately-owned houses or flats

This is the most common form of student accommodation. Many students spend the bulk of their university years living in privately owned houses or flats, often located in neighbourhoods with a high concentration of students. These properties are owned by individual landlords or companies and rented out through the private rental market. They usually offer more independence but less management support compared to halls or PBSA.

When we talk about investing in student accommodation, we’re usually referring to purchasing these privately-owned properties, whether that’s PBSA developments or houses and flats in popular student areas.

2. University-managed halls of residence

Often simply called ‘halls,’ these are typically located on or very close to campus. They mainly accommodate first-year students, helping them settle into university life with easy access to lectures and campus facilities. Halls usually consist of individual bedrooms with shared communal spaces like kitchens, lounges, and bathrooms, fostering a social environment.

3. University-managed rooms and houses

These are owned and managed directly by the university but differ from traditional halls. They resemble regular flats or houses and often provide a bit more independence and privacy. Because the university oversees these properties, it maintains a consistent quality and standard. Students living here usually share facilities such as kitchens, laundry rooms, or common areas, offering a balanced mix of community living and personal space.

4. Privately-owned halls of residence

Also called PBSA (purpose-built student accommodation), these properties are designed specifically for students but are owned and operated by private companies rather than the university. They tend to be modern buildings with facilities like gyms, study rooms, and social areas, and they often offer flexible lease terms tailored to the academic calendar.

But what is student property investment? In short, student property investment means buying homes or flats specifically to rent out to students. This could be a regular house in a student hotspot or PBSA designed just for them. The big draw is that students are always on the lookout for good places to live near their university, so demand tends to stay strong year after year. That makes student property a reliable way to earn steady rental income.

What we like about student accommodation investment

Student property investment offers consistent demand, attractive yields, and valuable management advantages. Here’s why it’s becoming a go-to choice for investors.

Steady demand

The UK has a huge and growing student population, with nearly three million students enrolling each year. Because so many students need somewhere to live, the demand for student accommodation stays strong and even grows over time. This means landlords can often count on their properties being occupied most of the year, reducing the risk of empty rooms.

Resilience during economic downturns

When times get tough financially, people often cut back on spending, but education tends to remain a priority. Students usually continue enrolling in universities even during recessions or economic uncertainty. This steady stream of students helps keep demand for student housing more stable compared to other types of rental properties.

During the 2020 pandemic downturn, student properties saw only a 4% drop in occupancy, far outperforming traditional buy-to-let sectors, demonstrating the resilience of student accommodation as an asset class.

Attractive rental yields

One of the biggest draws of student property is the potential for higher rental returns. Because you can rent out individual rooms rather than just the whole property, the overall rental income can be significantly higher. Research from Paragon Banking shows that student property yields can be between 13% and 18% higher than typical buy-to-let properties, which makes it a compelling option for investors.

Longer lease terms

Student accommodation leases often align with the academic year, meaning tenants typically rent for around nine to twelve months at a time. This longer lease length can give landlords more predictable cash flow and fewer void periods, helping to minimise the hassle and costs that come with frequent tenant turnover.

Professional management options

Many purpose-built student accommodation (PBSA) properties come with dedicated management teams. These professionals handle everything from maintenance and rent collection to dealing with tenant issues. This means landlords can take a more hands-off approach, making student property investment less time-consuming than other types of rental investments.

Potential for property value growth

In cities and towns where student numbers are rising but the supply of good-quality housing isn’t keeping up, property values can increase over time. This means your investment could grow in value, not just generate rental income.

Modern, student-focused design

PBSA and newer student properties are often built with today’s students in mind. They come with modern amenities, like high-speed internet, study spaces, gyms, and social areas that make them more attractive to renters. Well-designed properties tend to fill up faster and keep tenants happy, which is great news for landlords.

Student property investment profitability

At Alesco, we’ve seen firsthand how student accommodation can be a rewarding addition to a portfolio. The UK’s robust and growing student population creates a steady demand that few other rental sectors can match. Unlike traditional buy-to-let properties, student housing often benefits from higher rental yields thanks to the ability to rent out individual rooms rather than whole units. This can significantly boost income, especially in university towns and cities with limited housing supply.

Another major advantage is resilience. Even during economic downturns, education remains a priority, which helps maintain steady occupancy levels. Furthermore, many purpose-built student accommodations come with professional management, making it easier for landlords to take a more hands-off approach without sacrificing income or property care.

Returns are competitive. On average, student-related property investments have delivered annual returns of 7% over the past decade. This is closer to 9% in top performing University cities.

A key advantage of Alesco’s student property investment opportunities is a unique form of tenant stability. Unlike typical student accommodation, our transitional properties are designed to cater to a broader demographic, supporting students as they become graduates and young professionals. This model encourages long-term occupancy, with properties often achieving close to 100% occupancy year after year. For investors, this translates into a consistent and predictable income stream with reduced risk.

In summary, for investors willing to put in the work and choose the right property, student accommodation can offer strong, reliable returns and diversify a property portfolio effectively.

Student accommodation investment: areas of consideration

Before diving into student property investment, it’s crucial to take a step back and carefully weigh a few important factors, including:

• High upfront costs: PBSA (purpose-built student accommodation) investments often require a significant initial outlay, including purchase and development expenses.
• Market saturation: Some areas have plenty of student housing already, which can increase competition and reduce occupancy.
• Seasonal vacancies: Student properties often face empty periods during holidays and summer breaks, which can affect cash flow.
• Management complexity: Multiple tenants, frequent turnover, and individual leases mean managing student properties can be more demanding than traditional rentals. Plus, student tenants sometimes cause higher maintenance costs.
• Regulatory risks: Changes in regulations, like the Renters’ Reform Bill, can impact rental practices and landlord responsibilities.
• Dependence on university demand: Your investment’s success hinges on local university enrollment and housing policies. Drops in student numbers or new on-campus housing can reduce demand.
• Location matters: Performance varies widely by area. Properties close to universities, amenities, and transport tend to do better.

Student property isn’t a guaranteed win, but with the right strategy, location, and support, it can be a high-performing, reliable investment that adds real value to your portfolio.

Grow your portfolio faster with student housing & Alesco

So, is investing in student property a good idea? The short answer: it depends. Before committing to a buy-to-let investment in student accommodation, it’s crucial to weigh your goals and the risks involved.

Start by defining your objectives. Are you after steady rental income, long-term capital growth, or a combination of both? While student properties often deliver strong yields, capital growth can vary based on location and market trends. You’ll also need to assess your risk tolerance; this sector comes with challenges like market fluctuations, regulatory shifts, and more active management.

Do your research to understand demand in your target area. Look at university enrolment trends, expansion plans, and student population. Location is key: properties near campuses, transport links, and amenities tend to perform best. It’s also wise to plan your exit strategy early, as selling student property may come with unique considerations.

Grow your portfolio faster with student housing & Alesco. Contact us to learn more or get started.

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