Growing demand6 Jan 2026 09:57
The US has decimated foreign student interest with draconian immigration policies, this demand will be diverted elsewhere to other Anglophone countries - the UK being the obvious next in line. Enrolment from Chinese (richest group) students in the UK has already increased significantly. Labour govt policy to restrict older students bringing dependents will mostly affect those coming from poorer countries enrolling in low quality and low fee Unis who are primarily using the student visa as backdoor to the UK's grey labour market - gig economy work such as Uber and food delivery - this demographic is not a major customer group for UTG. The new fee for international students is low relative to their total cost (£50-60k p.a. at Russell group Unis) so shouldn't put them off.
The major bullish factor for student housing REITs is the state of the private rental market. Landlords are exiting in droves thanks to high interest rates, tax changes and onerous regulation and legal changes. But the big killer for privately rented student housing is the article 4 planning change; new HMOs in most areas now require planning permission which is unlikely to be granted where there is high demand for family housing. With a shortage of HMOs, students would now have to rent a 2 bed flat to share with only 1 other, since 3 or more occupants is an HMO. This makes purpose built student housing a more cost effective and convenient alternative. The other advantage compared with other REITs is the ability to increase rents annually in line with the market as opposed to waiting for indexed 5 yr reviews often with a cap in the case of many commercial properties. UTG divi cover is 1.3 so they are also self financing their development pipeline and entering JVs with Unis to avoid land purchase costs. For me at the current price this is a screaming buy, especially if inflation stays sticky.
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