Increasing Net Operating Income (NOI) in Student Accommodation PBSA & Co-living Apartment Buildings without increasing rents

5 Minute Read

Outside of the conventional annual rent increase which reports suggest average between 2-3% per year for student accommodation and 1.5-2% per year for the private rental sector (PRS), there are additional ways that owners can increase revenue from their stock.

Whilst the prime focus should be on delivering the core services of providing well-kept, safe premises, there are ways to increase the profitability of Purpose Built Student Accommodation (PBSA) and Build to Rent (BTR) Apartment Buildings through Ancillary Income.

Ancillary Income? It's income obtained from goods & services outside of the core business, which is the rental in our case.

Laundry Facilities

Laundry is a paramount service that can not only attract, but retain quality tenants while adding directly to the bottom line through a revenue-split arrangement with an equipment supplier.

New technologies in the market for laundry facilities allow tenants to easily top up their "wash" cards and find out when their clothes are ready through an app. Contracts with laundry equipment providers are commonplace with universities, key worker sites, housing associations and of course PBSA & BTR apartment complexes. The constant revenue stream from this is small but fruitful and the best part is that the external company takes charge and fully manages/ maintains the laundry equipment.

Vending Machines

Similar to laundry facilities, vending machines selling confectionery can provide a good stream of income but are only useful for large complexes of hundreds of tenants to really see the pecuniary benefit through a revenue-split arrangement with the supplier that provides a full management service.

Car Parking

A premium in student accommodation & city centre locations for any BTR schemes, what's more parking can be charged for at a rate of up to £1,000 per year depending on the location of the property and often more inside of London. An opportunity only afforded to schemes located in areas where parking is a challenge. Charging for parking is common-practice amongst PBSA schemes.

Allocating Units for Short Term Lets

Some units within the building can be allocated for short term rentals only, Airbnb style lets which will only take roughly 1-2 weeks of renting it at short term premium nightly rates to generate what it would ordinarily make if it was let on a long term rental.

This is a lot more of a hands on approach however as the units will needs to be constantly marketed through sources like Booking, Airbnb, HomeAway.com. The returns can be significantly more and keep any on-site team busy!

Cleaning & housekeeping services

An additional cleaning service could be arranged through a cleaning contract with a firm that provides weekly or fortnightly cleans of the occupants' private accommodation. A revenue-split can be done here and it also means that an external company is responsible for this.

If the complex is large enough and there enough tenants interested, it could be worth employing full time cleaners or housekeepers in-house which could develop it into more of a premium hotel-style service with regular changing of bedding and towels. A very labour intensive approach but it would mean a healthy premium could be charged.

Starter Pack

For totally new renters that don't own any of the basic living apparatus, Bedding, Pillows, Pots, Pans, Cutlery and the like can be packaged up and sold to occupants when they move in.

Storage

Any spare land forming part of the site or vacant areas within the property can be repurposed, secured and rented out as storage units to students wanting to store their belongings over the summer month or PRS tenants need extra space.

This could also be applied to spare studios/ rooms during long void periods, for instance, in student accommodation over the summer when traditionally a number of units in the building can be unoccupied. Turning these into storage rooms can be an income boost. Storage companies specifically target students over the summer so market activity is showing there's potential lucrative market there.

Referral Scheme - Generate income from paid referrals to outside firms by offering their services or products to tenants (with their permission) on-site. Referrals can range from contents' insurance providers to cinema memberships and mobile phone networks/ providers.

Any questions about PBSA or Build to Rent Apartment Block schemes? Comment below and I'll answer as best I can or even write an article on it.