The student lettings market is changing and it appears that new student landlord entrants are having more success than those that have been in the business for some time, that’s according to the latest student landlord survey from accommodationforstudents.com (AFS).
It’s a truism that in any business you must move with the times and adapt quickly to the changes in demand quickly, as they occur. But the evidence from this survey seems to show that some longer established landlords are becoming complacent; they are expecting the same business to come to them year after year without making the effort to improve.
With more corporate investors and universities themselves investing in purpose built blocks, with all mod cons, more students in the UK living in this privately owned hall-style accommodation. Traditional student HMO landlords in the sector therefore are having to compete more aggressively to attract their student tenants. What that means in practice is investing more money into renovating in their properties.
The leading student accommodation website, accomodationforstudents.com, has just released the results of its bi-annual survey looking at the changes, trends and perspectives on the student lettings market.
The survey which is responded to by student landlords and agents shows that 70% of landlords have let all of their properties for the 2014/2015 academic year, with those who are relatively new to the market reporting greatest success at letting their entire portfolio
Fully 89% of relatively new property managers (with 1-3 years of experience) reported letting their entire portfolio, compared to 65% of those with 5-10 years of experience. Of those that have not let all of their properties yet, just fewer than 50% have managed to let over three-quarters of their portfolio.
With the number of students living in privately owned halls doubling since 2007 (according to Higher Education Statistics Agency), private landlords are now having to learn to compete.
AFS has said: “Whilst some experienced student landlords are left redirecting rents to renovate their properties, those entering into the market more recently are benefitting from a greater understanding of student expectations and a desire to compete with what the rest of the market has to offer.”
In-line with the previous AFS survey results in July 2014, 68% of respondents say, in their experience, it is better to let to students than non-students, with 87% believing that students make good tenants and 92% expressing their plans to continue renting to students. This is linked to a number of associated benefits: better rental yields (77%), fixed tenancy length (67%) and an annual market for new students (47%).
Three-fifths, (61%) of respondents have increased rents across all or some of their portfolio, with the majority (93%) keeping this increase below 10%.
There is also a correlation between rental increases and confidence in the market, with those who increased rents for the 2014/2015 letting year feeling up to three times more confident about the future. Market confidence is highest in London and Scotland and lowest in the North West and Yorkshire.
Landlord confidence in the student lettings market was also linked to whether properties are accredited or not. 59% of respondents stated some or all of their properties were accredited and as a result, were increasingly likely to report being considerably more confident about the market. However, perceived barriers to becoming accredited included it not being considered necessary for a successful let, the associated costs and administrative burden.
The level of respondents offering a bills inclusive package has risen to 60% (from 56%), although those offering this also report a lower success rate. It is possible landlords use this to improve competitiveness in saturated markets, although previous surveys carried out by AFS have suggested that students look favourably on bills-inclusive rental packages. The majority of landlords who do not offer this are deterred by the potential for over usage.
Managing Director of AFS, Simon Thompson, says
“This is the second survey of this kind that we have carried out. By comparing the results, it is interesting to see what shapes landlords’ perspectives of the student lettings market. Previously it was reported that letting success correlated with experience, whereas in this instance, success has swung in favour of landlords who have entered the market in the last three years. New landlords typically come onto the market with renovated properties offering a high standard product that are attractive to students and let quickly.”
— LandlordZONE (@LandlordZONE) February 19, 2015