Over 1.7 million students have enrolled in South Africa’s universities and colleges this year, according to the Department of Higher Education and Training. With so many young people needing a place to stay, and a shortfall of more than 500,000 beds, it’s little wonder that investors are eyeing up the growing student market.
A steady demand, stable rental income, and in places like Nelspruit (Mbombela), a thriving higher education hub, create a recipe for success for potential landlords. Here’s a look at the opportunities and challenges of investing in private student accommodation in the city.
Why student rentals earn an A+ in returns
One of the biggest advantages is the potential for higher returns. Student properties are usually rented per room rather than as a whole unit, meaning a two- or three-bedroom property can house multiple tenants and generate more income than a standard residential let. In Nelspruit, well-priced student-friendly properties are readily available, with one-bedroom flats often starting around the R500,000 mark, making it easier for landlords to enter the market and start earning rental income quickly.
Demand in student areas is strong and consistent, and Nelspruit is a prime example. With multiple higher education institutions, including the University of Mpumalanga, UNISA, Boston City Campus, Eduvos, Rosebank College, MANCOSA, Enhlanzeni TVET College, and Brooklyn City College, there’s a steady stream of students looking for accommodation. While some tenants move on after a year or two, new students are usually ready to take their place, keeping vacancies low and rental income predictable.
Managing student accommodation is also relatively low-stress. Tenancies typically last at least 12 months, providing stability without long-term commitment. Students tend to be easy-going tenants, concerned more with convenience than perfection, which means fewer maintenance headaches for you. They are generally flexible about furniture and finishes, focusing instead on location, safety, and access to campus, so you may not need to invest in luxurious finishes to attract them.
A Supreme Court of Appeals (SCA) ruling in 2023 has also strengthened the rights of student accommodation providers over their properties. It ruled that they can legally evict students from university housing at the end of their studies, as it isn’t considered a permanent residence. In this respect, it says the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act (PIE) doesn’t apply to student accommodation.
Where student lettings can test you
Investing in student lettings in Nelspruit does come with its challenges, and it’s essential to be aware of them before jumping in.
One major issue is illegal student housing, which has become a growing concern in the city. To avoid fines or legal headaches, you’ll need to follow the City of Mbombela's Off-Campus Student Accommodation Policy. This includes:
- Ensuring you have the required land rights to operate a student accommodation
- Being within 20 km of the tertiary institution
- Obtaining consent when housing students above a certain number
- Registering on the tertiary institution’s off-campus accommodation database
- Meeting minimum design standards
Buyers should read the policy thoroughly and understand all requirements before investing — knowing the rules upfront can save you time, money, and stress later.
Another challenge is the cost of reverting a property back to family use. Non-standard layouts tailored for multiple students can make resale tricky. Planning your renovations carefully and keeping flexibility in mind can help make future transitions easier.
Financial risks also exist if you decide to register as a private landlord for NSFAS-funded students. There have been cases where the scheme failed to pay them and they have fallen into debt, unable to pay their mortgages, staff salaries, or municipal bills. In these instances, landlords should take rental insurance coverage specifically designed to mitigate the risks associated with defaulting tenants.
Student rentals also come with operational challenges. First-year students are often new to independent living, which can lead to maintenance issues. Hiring cleaners or a house manager can help keep the property in good shape and catch wear and tear early.
Property damage is another risk. Require a deposit and, where possible, a parent to co-sign. Establishing clear house rules up front helps set expectations and protects your investment.
Finally, the academic calendar can leave your property empty during holidays. Consider arranging for security or a caretaker to manage the unit while students are away to prevent break-ins and ensure the property remains in good condition.
How to graduate to hassle-free student rentals
Partnering with Kellaprince Properties means your student accommodation investment can be smooth sailing. We can help you find the right property in the right location, connect you with prospective student tenants, and manage your property so you can focus on the returns, not the stress. View our Nelspruit properties for sale and take the first step towards achieving your goals.
Image credit: University of Mpumalanga by Bobbyshabangu | Wikipedia | Public Domain | https://tinyurl.com/2rb4dt8t
