Making plans for 2018? What about student accommodation?
Anyone whose personal experience of student housing dates back to the days before student loans will probably remember a breeze-block cell, a dingy bedsit or a house share reminiscent of a scene from The Young Ones. Accommodation for students was cheap, but it was rarely cheerful.
But there has been a revolution in the financing of higher education and a huge change in student expectations. As student numbers have climbed, private and institutional investors have pumped millions into the development of purpose-built student accommodation, and some of it is very swanky indeed. Individual rooms have en-suite bathrooms and shared spaces are filled with quality fixtures, electricals and the all-important Wi-Fi. Our universities also attract large numbers of overseas students. Some of these are from wealthy backgrounds and demand not just comfort but luxury.
Students can be the ideal tenant
Many investors are making good returns by investing in such developments, but there is still a role for the private landlord and the individual property. And whereas in the ‘bad old days’ of student squalor, it took a special kind of landlord to make an income from students, nowadays students can be very good, reliable tenants. Their loans guarantee they have the cash for the rent, and established parents are often available to stand as a guarantor. Student-accommodation offices help to match rooms, landlords and renters. With fixed academic years, pre-arranged tenancies and a ready supply of new tenants each autumn, it’s possible to prevent void periods, fill a single room in a shared house and, generally speaking, ensure healthy returns.
Do your homework
You’re too late to catch the 2017 intake, but if you start planning now, you could be well-placed to make your first student lets this time next year.
But, of course, you must know what you’re doing. Let’s assume you’re purchasing a larger property and planning to rent six individual rooms with shared bathrooms and a kitchen. You’ll need to check whether the local authorities would consider this a house of multiple occupation or HMO for which you’d need a licence. A mortgage might also place restrictions on the types of tenant you can have. Location is critical. You’ll want the property to be close to the campus and to local nightlife, but you should also ensure that the area you’re targeting has a growing student population and a demand for housing. If there’s little demand and your property is competing for tenants against an immaculate, new purpose-built block, you could be in trouble.
High achievers demand high spec
And the specification of the rooms you offer will have to be high. Remember those en-suites, the Wi-Fi, the quality electricals? They’re not luxuries. To today’s students, they’re basics. We’ve heard stories of students rejecting a property simply because there wasn’t a microwave included. We’ve also heard from parents that some potential students are picking their preferred university because of the accommodation, rather than the courses offered. Be prepared to freshen up a place every summer, replace and repair things promptly, and remember that furnishings do matter for the style conscious youngster leaving home for the first time.