Rising tuition fees to spark reinvention of student landlords?

Recently the nationwide tenant eviction and rent recovery group warned that the buy-to-let sector could be a potential casualty of rising tuition fees due to an expected fall in student applications. This coupled with a surge in undergraduates likely to opt to study near their family homes so they can live cheaply with their parents could impact dramatically on landlords’ incomes.

Fewer students will ultimately lead to a drop in demand from undergraduates for properties in university towns.

This will create greater competition for cheaper properties and put landlords under increasing pressure to reduce their rents in order to appeal to students or risk having empty properties on their hands.

Graham Kinnear, Managing Director at Landlord Assist says:

“We have been closely monitoring the situation and feel that the landscape for student landlords is about to change significantly.

“Demographics show that there is to be a decline in the number of teenagers who may be considering university and the commencement of the increased student fees means many are searching for a suitable course at their local university with the intention of living at home in an attempt to avoid graduating with enormous debts.”

Whilst the Government felt it unlikely that many universities would adopt the high fees, nearly three-quarters of universities are now proposing to charge the maximum £9,000 per annum.

Paul Hughes from the Research Analysis department at Landlord Assist believes the downward pressure on rents could lead to a situation where many landlords are forced away from the student sector.

He says:

“A reduction in student numbers could have a detrimental effect on the rental market, especially in university towns and cities where the local market relies on a regular flow of students every year.
 
“It is certainly true to say that gone are the days when students are forced to accept any standard of accommodation so student landlords will need to step up their game in order to attract a reduced number of tenants searching for accommodation or indeed consider leaving the student market altogether.

“The landlords who are doing well out of this market are the ones providing quality accommodation with decent furnishings and facilities for internet connections.

"With fewer students, those left will be able to insist on better standards and landlords will need to continuously look at ways to improve their properties.”

Despite changing conditions in the student market Stephen Parry, Commercial Director at Landlord Assist believes that landlords with properties in university towns may still be able to find high demand from professional tenants.

He says:

“Those landlords who see a reduction in demand in the student sector may be able to replicate their income by letting to private professional tenants. However, professionals are likely to expect a higher standard of accommodation so upgrades and higher levels of maintenance and repair are a necessity.

"Also, any receptions reconfigured as student bedrooms may need to be reinstated to their original condition.”