Letting to students: a market update for landlords
If you’re a landlord who lets to students, you’ll be aware of how hard the last year has been – for them and for many other private landlords.
Since the first lockdown hit last March, universities have cancelled in-person lectures, any ‘live’ teaching has been done via video and all learning resources have been moved online. On top of that, the traditional student social life has been virtually non-existent. And so, with little reason to be near their university, many students have spent most of the last 12 months back at home with their parents.
What’s happened with student accommodation?
It’s no surprise that a lot of students feel they shouldn’t have to pay for accommodation they’re not using and there has been some sympathy for them.
Many university halls of residence and Purpose-Built Student Accommodation (PBSA) properties have let students end their rental contracts early. Where students have stayed, some have been given discounted rents to reflect the fact that virtually all the usual facilities have been unavailable during the lockdowns.
That’s fine for accommodation owned by big institutions. Universities are still charging tuition fees and large private institutions may be able to afford a temporary drop in rental income. But many individual private landlords depend on collecting rent for income and to cover Buy to Let mortgage payments. Nevertheless, they’ve been put under some pressure to waive rent for those students who’ve returned home.
From a legal point of view, landlords are perfectly entitled to receive the full rental amount each month. And both the Government and the National Residential Landlords Association (NRLA) have continued to advise students that they should keep paying rent and abide by the terms of their tenancy.
Can students afford to keep paying rent?
The answer is: they should be able to. They’re still receiving their maintenance loans - regardless of where they’re living - and the reality is that the majority of students have continued to pay rent as usual. If they are finding it hard to make ends meet – e.g. if they’ve lost a part-time job as a result of the pandemic – the universities do have hardship funds they might be able to access.
The Government has boosted their financial support for students twice this academic year – by £20m in December and another £50m in February. Universities Minister, Michelle Donelan, said: “We have distributed £70m for hardship in this financial year alone – on top of the £256m of Government-funded student premium which universities can use for student support. This additional support will provide real, tangible help for those students struggling financially as a result of the pandemic.”
In addition to the Government support available, we’ve found that if students have still had difficulty making full rent payments, landlords have tended to be supportive. Many have negotiated either a reduction in the monthly amount or payment ‘holidays’ to allow students to stay in the property. In general, most tenants and landlords have managed to come to some kind of agreement and relatively few student tenancies are in dispute.
Student numbers are up, despite Covid!
When Covid-19 hit, there were gloomy predictions that international student numbers would plummet – on top of the expected reduction in students from the EU, post-Brexit. If that happened, the loss of income from tuition fees would put many university jobs at risk.
The Guardian reported in April 2020 that the University of Manchester was preparing for up to an 80% drop in international students because “they may be unable or unwilling to travel, face financial hardship or simply wish to defer until there is more certainty”.
So there was a great deal of surprise and relief when the reverse happened! Figures from UCAS for the start of the academic year 2020-21 show:
- Enrolments from EU students fell by 2%
- The number of students accepted from outside the EU rose by 9%
- Overall, there were a record 515,650 students with a confirmed place, up 4% on the previous year
Despite the pandemic, it seems the quality of teaching in the UK is still a draw for international students, who might also by encouraged by the reintroduction of the two-year post-study work visa that they’re entitled to.
The future’s looking bright
With overall student numbers up and international admissions strong for this academic year, it’s hoped the expected dip in admissions from the EU post-Brexit will be temporary. The Centre for Economics and Business Research (CEBR) is optimistic about the future, forecasting that by 2024/25 there will be an overall 8% rise on 2018/19 student numbers.
So, if you’re a student landlord, you should be encouraged by this increasing demand. Even though there have been advances in the construction of purpose-built student accommodation, not all students want to live in individual units in these modern blocks. Many prefer to have a more traditional house-share with their friends, so there’s plenty of opportunity, as long as you give them what they want. And that’s an all-in rental package.
Around two-thirds of students say they’d be more likely to rent a property where utility bills are included and they’re generally prepared to pay a premium in return for the convenience. However, only around a third currently have an all-inclusive rent. That means if you can offer a rental figure that includes:
- Council tax
- TV licence
- Reliable WiFi
…as well as a decent standard of furnished accommodation, you should have plenty of demand.
Whether you’re already a student-let landlord or it’s just something you’re considering, we’re here to help. Contact your local Your Move branch one of the team will be happy to answer any questions.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
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