With an increasing number of students in the UK opting to spend term time living in privately owned halls of residence-style accommodation, landlords who specialise in providing homes for undergraduates are facing stiffer competition for tenants.
But their efforts are paying off, with 70% of student landlords letting each of the properties in their portfolio for this academic year, according to research by the Accommodation for Students website.
But it is landlords with the least experience in the market who are most successful at securing student tenants. The AFA data reveals that 65% of landlords with between five and 10 years’ experience of the student market have let out their complete portfolio compared with 89% of student landlords with between one and three years’ experience of the market.
Of the landlords who have not let out their whole student property portfolio, less than half have let out 75% of their portfolio while there are many experience landlords having to redirect rents so that they can renovate their properties. Those who have recently entered this market have a greater knowledge of what the students require, which is helping them to compete in the market.
The AFS survey, which was carried out in July 2014, also shows that 68% of landlords prefer to let to students than non-students, with almost 90% believing that students make exceptional tenants with many putting plans in place to continue renting to these students.
Indeed, 77% of student landlords questioned say they have seen better rental returns. Many also prefer the fixed tenancy length and the fact that the market changes annually thanks to an influx of new undergraduates.
Increase in rents
When it comes to increasing the amount of rent charged, 61% of student landlords who responded to the AFS survey said they had put up rents for all or some of their portfolio, but most had kept this increase to less than 10%.
The increase in rents charged corresponds with rising confidence in the market. London and Scotland have seen the highest increase in confidence with the lowest coming in the North West and Yorkshire. The research suggests that the confidence displayed by the landlords in the student accommodation investment market is related to whether the properties are certified or not.
Many of those respondents also stated that some or all of their properties were accredited and they were showing more confidence in the market.
As the student accommodation market becomes saturated and extremely competitive, an increasing number of landlords are now offering packages that include bills because students do prefer to have their bills included in the monthly cost. Many landlords choose not to offer this as they believe that the open themselves up to the potential of over-use, which can prove costly.
However, the survey concludes that the key to success in the student accommodation market is no longer experience but a landlord’s commitment to keeping their portfolio of properties well maintained and in good condition. And this is where new entrants in the market appear to be succeeding in attracting undergraduate tenants.