Student Accommodation is also one of the few asset classes that can claim to be virtually recession proof – performing well through the 2008 financial crisis. The reason for this is that universities continued to receive record levels of applications year on year, creating consistent demand from students for high quality accommodation, and continues to do so until this very day, and will continue to do so for many years.
Investors in PBSA will purchase a studio, or entire apartment (comprising of multiple pods and shared communal facilities – kitchen/living room), on a leasehold basis, typically 125 years, receiving full legal title, all registered with the Land Registry in the UK.
Investors then sign a management agreement with the operating company of the building, who will most likely pay a rental guarantee for a fixed period of time – it is standard for the rental guarantee period initially to be 5+ years. This provides an entirely hands-off investment for the investor.