How will Covid-19 continue to affect student let landlords?

by 08/07/2020

I read recently that Cambridge University is planning to cancel all face-to-face lectures for the 2020/2021 academic year to ensure it can comply with the social distancing measures that are likely to be with us in some form or other for the foreseeable future.

And Cambridge University isn’t the only institution taking such a radical step in response to Covid-19. Other academic institutions around the country are also planning to incorporate more online teaching into their syllabuses to cut down on the number of students on campus.

Student numbers in the UK have boomed in the past few years, and in order to keep up with demand for accommodation many landlords have turned to Houses in Multiple Occupation (HMOs).

In what’s been a challenging time for the buy to let market, HMOs have been a recent success story, proving attractive to investors looking to maximise their rental yields, especially in cities with a high population of students. They generate the highest average rental yield (6.2%, almost a full percentage point higher compared to the overall average rental yield of 5.3%) and offer the peace of mind that comes with knowing that, due to multiple tenancies, rental income is more secure, even if one tenant leaves a void.

So with students staying away and courses moving online, what effect is this likely to have on student let landlords?

I think it’s fair to say that some landlords may experience a short-term fall in demand, but I don’t believe it’s going to be the ‘car crash waiting to happen’ that I’ve seen it described as.

Research carried out for the University and College Union to assess the potential impact of the pandemic on UK higher education enrolments suggests that 72% of students would still attend university, even if the university could not operate as usual as a result of social distancing restrictions.

And as some universities consider offering full-time online courses, other institutions are looking at a ‘hybrid’ approach to learning, avoiding large lectures and instead opting for teaching in smaller groups, such as seminars and tutorials, in order to keep campuses open.

I believe students will always want a real life university experience rather than a virtual experience. The chance to study and improve their career prospects, to live away from the family home for the first time and discover their independence, and the opportunity to meet new people is all part of the attraction of university life for young students.

Of course universities may well change their stance if government guidelines on social distancing change in the next few months, but for the time being it’s prudent for them to plan ahead as we wait for the impact of the relaxation of lockdown to become clearer. As long as there are students, I’m confident that HMOs will continue to be attractive to landlords looking for alternative ways to boost their bottom lines.

For intermediary use only
BBR 0.10%