Where can buy to let landlords find high yields, strong nationwide rental demand and a sound cash-generative investment. The answer is by investing in student accommodation says property specialist Assetz.

Student accommodation has always been one of the company’s primary recommendations, whether investors are looking to add to existing property portfolio, or looking to make their first ever purchase.

UCAS recently reported that student applications for 2009-2010 are approaching 2.4 million (up 34 percent from 1996-1997) and this has resulted in a huge national shortage of student accommodation.

Knight Frank also reported through their own independent research, that only 50 percent of all students in the UK have access to high-quality purpose-built student accommodation.

Assetz says there are three types of property that it sources for student accommodation:

Purpose-built student accommodation attracts a higher quality of student - higher rents and overseas students with minimal budget restrictions. These are effectively private halls of residence with rental units of studios up to five bedroom cluster apartments.

Refurbished houses converted to full HMO (Houses in Multiple Occupation) standards. This delivers much higher yields with student use than the same property rented to a single family.

Individual apartments within blocks adjacent to university campuses. This takes advantage of distressed sale opportunities in the residential market place but utilises the property for student purposes to significantly increase yield.

Other benefits Assetz highlights for investing into the student property sector are:

1. Cash-positive, long-term investment – typical rents are significantly higher for student properties than a comparable BTL property in the same city. As a result, mortgages can often paid off in 20 years or less from the net rents received.
2. More people attending universities, creating a solid and sustainable demand. London has the most students of any city in Europe and the most international students of any city in the world. Other cities with large student populations include Manchester, Leeds and Sheffield.
3. Minimal voids – tenanted for almost all of the year and you typically know seven months in advance that your property is tenanted for the next academic year due to pre-lettings.
4. Hassle-free investment – private halls are managed by on-site management teams who will handle all bills and ground rent, meaning you only have two outgoings: mortgage and management fee.

Rental income has increased by 5 percent each year for the past six years in the student accommodation property sector. In 2009, many schemes actually achieved 10 percent gross rental increases.

Assetz recommends student accommodation as long-term income investment, but points out that investors need an exit strategy, HMO houses can also be converted back for residential use and standard apartments near to university campuses can be sold for traditional residential purposes.

All of which helps to reduce the risk to the investor!