The Daily Telegraph - Saturday - Money
Student digs ‘crash’ looms for landlords
With no freshers’ weeks and lectures moving online, many properties could end up empty, says Melissa Lawford
The impact of Covid-19 on the rental sector in university towns is a “car crash waiting to happen” as students stay away and courses move online. Buy-tolet landlords could see a huge fall in the number of tenants when the next academic year starts if universities use online-only teaching – which would allow students to avoid paying rent by studying at home – or if freshers defer their entry.
David Cox of Arla Propertymark, a trade body for lettings agents, said: “Student accommodation agents are looking at the possibility of their entire business disappearing for 12 months.”
A report from the University & College Union, a trade union, has forecast a drop of 16pc in the number of British students in the next academic year.
Cambridge and Manchester universities plan to move all lectures online next term, while there is much uncertainty over how other universities will continue teaching.
Andy Squire of the students’ union at the University for the Creative Arts said: “We might see students deciding to defer a year.” There is a tight deadline, as new students must confirm offers with Ucas by June 18.
Many smaller landlords who rent out individual properties to students have borrowed heavily and could not afford such holes in their revenue.
Anthony Hart of Allsop, a property auction house, said: “There’s potentially a car crash waiting to happen.” The situation will be worse for investors in cities with less prestigious universities, he added. “In [towns such as] Bolton and Huddersfield the situation is already quite apparent.” He cited the example of a Hull landlord who was trying to sell up. “He has 45 houses and no tenants for next year,” Mr Hart said.
Competition to find new tenants for these properties could become fierce, potentially pushing rents down. In cities such as Nottingham and Exeter, 10pc of all properties qualify for exemption from council tax as they are let by students, according to Hamptons International, an estate agency.
David Peterman, 64, runs a portfolio of 180 student bedrooms. Half of his tenants left for lockdown and many lost their part-time jobs, he said. As a result his income for the summer term was down by 10pc or about £20,000.
Coronavirus will exacerbate the threat to squeezed private landlords from the purpose-built student accommodation (PBSA) sector. Unite Students, a PBSA provider, waived rent for students who fled lockdown at a cost of £100m. The company expects to gain significant market share from private landlords.
But Lizzie Beagley of Savills, the estate agent, said PBSA relied heavily on foreign students, putting the sector at risk. Universities have forecast a £7bn fall in overseas student fees.
If landlords can survive the next year, they may be able to reap the benefits: Simon Thompson of Accommodation for Students, a student lettings website, has predicted a surge of students in September 2021.