Mature students fuelling student property demand

The current state of the jobs market is fuelling demand for student rental property as figures reveal an increase in applications from older individuals wanting to attend university.

There has been a 12.9% increase in applications from the 21-24 age group to attend university in the 2009/10 academic year, whilst the number of applications from people over the age of 24 has risen by 12.6%. Overall, there has been an 8% increase in student applications to 464,167 individuals.

John Heron, managing director of buy-to-let mortgage specialist Paragon Mortgages, comments that the increase in older applicants is likely to be a result of the weaker employment market. He says: ‘If individuals have been made redundant or are struggling to get a job they may see higher education as an attractive option. That could explain the increase in older applicants for the 2009 academic year.'

He adds: ‘This increase in demand is not only good news for landlords that focus on the student lettings market, but also potentially landlords in the wider vicinity of the university. As universities expand, demand for good quality accommodation also increases, which should filter through to rental income. More mature students may also be prepared to travel further to get to university, so may look to rent property away from the main student locations, therefore boosting demand more generally.

‘Although figures are currently unavailable, I'd also expect an increase in the number of mature students applying for postgraduate courses as students look to develop their knowledge further and present the best CV they can to employers.'

Student landlords typically have lower void periods than the wider buy-to-let market, with the benefit of an annual let (property still has to be paid for even during summer) and frequently a parental guarantee. Rental income per property also tends to be higher as landlords typically let to students on a per-room basis.

Paragon Mortgages' Trends research reveals that average yields of landlords that hold student property in their portfolios is 7.2% compared to 6.2% of those whose portfolios do not consist of any student property.