The Student Accommodation Landscape
The student accommodation market is a goldmine waiting to be tapped into. Despite the initial blow from the pandemic, the sector is showing robust signs of recovery. There’s a surge in demand, making it an opportune time for landlords to dive in.
The Competitive Edge
The competition has never been fiercer. The game has changed with private landlords and large institutional investors stepping into the student housing arena. These big players offer attractive amenities and high standards, albeit at premium prices. But don’t let that deter you! Small-scale landlords can still hold their own and reap substantial returns with the right strategy and location.
Research is Key
Before you jump in, do your homework. Understand the local markets and student preferences. There’s no substitute for pounding the pavement, observing student behaviour, and asking questions. Talk to university accommodation officers and local letting agents. This groundwork will pay off in the long run.
The HMO Factor
Multi-occupier rental housing, or houses in multiple occupation (HMO), require more management work from the landlord than a single let. Be prepared for more wear and tear with a multi-occupied student house than a standard buy-to-let. But remember, the financial returns and the human interaction with your student tenants can be much more rewarding.
The Financial Upside
Imagine a typical three-bed single let with a good rental income of somewhere between £800 and £1200 per calendar month, depending on the location. Now, convert one downstairs room into a bedroom to house four students, keeping the house just below the HMO mandatory licensing scheme**. With four students, the income will likely be over £2,250 per month, with no council tax to pay for students. The financial comparison is stark!
What are Students Looking for?
Students prioritise six key factors when seeking their university accommodation:
- Location, Location, Location
- Available facilities
- Standard/quality of the accommodation
- Landlord responsiveness
The student market has bounced back from the depths of the pandemic. All indications suggest that the 2022-23 intake was more robust than ever. Confidence is returning to the sector following the lower occupancy rates and rent collection difficulties experienced in 2020-21.
Can Students Still Pay?
Yes, students can still pay. In many ways, students can bring a more reliable rental income than individual tenants. Most are funded by grants/student loans and will prioritise rent payments. Student houses are often joint agreements, making everyone joint and several responsible for the payments. In addition, it’s not unusual to seek a guarantee from a parent or guardian to cover the rental payments.
Competing Against Build-to-Rent
Large-scale operators bring shiny new tower blocks with en-suite bathrooms, common room facilities, and gyms. But this doesn’t mean there’s no room for the traditional small-scale landlord offering clean, affordable accommodation in the traditional housing stock. There will always be demand for this type of student living where students prefer to live in a privately rented house.
Essential Features for Student Accommodation
To compete successfully, there are several essential features that students expect:
- A reliable and fast broadband connection
- A double bed in each room
- All-inclusive bills
- Secure private rooms
- Multiple Bathrooms
- A comfortable, spacious common area with a large TV
Running a student property can be demanding, but the rewards are there financially and in terms of the satisfaction of knowing you are providing comfortable and safe accommodation. The sector is growing, offering excellent opportunities for those willing to work hard to make an excellent income.
If you need more information or insights into Student Accommodation, please get in touch with Pinpoint Finance.
** Check with your local council for selective licensing rules in your area. York Council’s website, www.york.gov.uk