The state of the HMO market has shown a marked decline in recent years, at least in the general population. The often-quoted figures of lost stock are said to be around 300,000 over the last six years. Student lets though, have shown the opposite trend, and recent analysis has shown the potential for growth. This sector has the potential to slow, halt, or even reverse the trend seen across the general population.
Why might student lets change this trend?
The Higher Education Statistics Agency found that there were around 2.8 million students during the financial year 2021-2. Further, the expect around one million more applications every single year from now until the year 2030.
That’s a lot of students and they’re similarly going to need somewhere to live. Naturally, a percentage of them will already be homed (mature students and those who study in their hometown and live with parents, for example) but those tend to be a minority.
However, as well as being great for the industry, this could also be a ticking time bomb due to a severe lack of housing stock currently.
Too little purpose-built accommodation
The last ten years has seen massive investment in student accommodation from universities. We have seen upgrades to existing older stock, and a new wave of halls built on brownfield sites. Like the former, the latter is typically close to the university.
However, these are typically reserved for first-year students. After that, they typically move into HMOs with friends for their remaining two years. Postgraduates typically don’t have halls available. Where they are available, they’re a small number and typically available to families. This is only going to get worse, especially as construction cannot keep up with demand.
Landlords should consider HMO investment now
Now might be a good time to invest in HMOs, not just in the student sector, but for the general population too.
If you live in a high student area, it’s wise to consider renting to students. Surveys of landlords to student tenants have repeatedly shown they are dependable and pay on time. While there are concerns about property damage, it is no worse than HMOs in the general population.
Yields are higher than average (often due to central location), there are fewer evictions and their associated problems (due to short tenancies – typically one year). You will also have constant demand from an ever-replenishing and now ever-increasing number of viable tenants.
If you’ve just entered this market or considering opening your HMO(s) to student tenants, take a look at our listings. Pads for Students is a hub for students and landlords of all types of accommodation, updated regularly.