Investment Articles
Student Homes Go Upmarket - Times Online
Students are not the first target group that springs to mind for developers. But in these shaky market conditions they represent a solid tenant base. In the run-up to Easter, undergraduates arrange their housing for the following academic year. Negotiations between friends may become fraught, as may phone calls home, during which worried parents are urged to part with sizeable deposits to secure rental properties that they have never seen - and which will not be lived in for a further six months.
There is little a landlord or managing agent likes better than the signature of a parental guarantor on a tenancy agreement. This near-certainty of payment is why the student rental market is seen as a safe bet. And with students signing up six months in advance, yields can be predicted with more foresight than in the regular lettings market.
The UK's biggest student housing website, accommodationforstudents.com, reports that student rents have increased by 19 per cent over the past five years and by 1.5 per cent in the past year; £62.40 is now the average student rent per week in the UK. In light of the fluctuations over the past 18 months in the wider rental market, an increasing number of mainstream landlords may now tailor their portfolios to a specific part of the market, such as students or the elderly.
While the annual supply of students is fairly recession-proof, the constancy of the student market may be less stable than it appears if the findings of the UK Youth Parliament's recent survey are to be believed. Thirty-six per cent of the 1,000-plus young people surveyed said that the recession would influence their choice of university, perhaps causing them to pick one near by that would enable them to live at home.
Parents often feel worried by their lack of control over student accommodation. The best way to secure safety is to check that the landlord is accredited by the university. In many cases the university accommodation officer acts as a managing agent for halls of residence. However, there should also be an accreditation system through which private landlords are screened for reliability - both financially and in terms of property maintenance.
One way of ensuring that you get what you pay for is to use an established student developer that constructs purpose-built buildings then becomes the landlord. The two largest are Unite and Opal; between them they have accommodation in more than 20 university cities.
Many of these new-builds have double bedrooms and en suite bathrooms, which is a significant improvement on the boxy bedrooms found in older student halls. An Opal development on Pitfield Street, in Hoxton, East London, has 514 student rooms for rent; the rate is £120 a week and there is a common room with satellite television; it is let through the University of The Arts.
Lucy Currell, 20, is in her first year reading history and sociology at Manchester University. She has just arranged her shared house for next year with five friends. They are sharing a seven-bedroom house in Withington, near Fallowfield, the most popular student area. She says: “We went for a seven-bedroom house for six people because it was still within our budget and we get an extra sitting room. We are paying £74 a week each. We found it by knocking on the doors of student houses that we liked; all the best houses and landlords get passed on by word of mouth.”
Sharing a large townhouse in a bustling part of town remains the default choice. Lucy's sister, Amy, 21, did the same while studying history at Sheffield University. She rented a house next to a derelict building and battled constantly with damp for a year. As a result of the persistence of her parents she negotiated a reduction in rent, the repainting of the property and the installation of dehumidifiers. She cautions that it can be impossible for students to get their deposit back without providing a letter from their utility provider stating that they have paid their final bill.
Amy and Lucy's mother, Anne Currell, runs a London estate agency, Currell Residential. Her tips to parents are: “Check that the deposit is going into a tenancy deposit scheme; a local landlord address is a good thing to look for; try to get your child to meet the landlord in person as intuition is invaluable; make sure that you speak to the landlord on the phone, as a good landlord should be used to your questions and be willing to answer them quickly and politely; tell your child to write everything down, such as how much they have contributed to bills, and to keep written records for everything.”