Speculation has been flying around this week about the future of student letting; a 9% drop in applications because of the rise in fees will hit the property market for student properties without doubt, but what will the effects be?
The Reasons for the Drop
Though on the face of it 9% seems like a large drop, it may not be sustained; there was an increase in applications for the 2011 intake because many students turned down gap years to avoid higher fees. It may be that applications will increase again for the 2013 intake and this fall, though it would mean a definite drop in demand for one year, might just not be sustained.
Types of Accommodation
If your property is marketed at first years (in halls style accommodation) you may need to start being creative, but a drop in new applicants doesn’t suddenly mean there is nobody at university – it just means there may be less people in the future. Most institutions, however, have a range of students; from undergraduates to PhD students (and staff) and you should try to be flexible with who you let to.
The Real Effects
A drop in applicants will probably mean a fall in demand across the market which may mean one of two things. Firstly, you may find that you can’t find tenants for your property for the academic year. If this is the case you should not give up, many tenants will look to change accommodation midyear, but you should definitely take out Unoccupied Property Insurance. Secondly, it may mean a drop in price for properties across the board. Be sure to cover yourself against this and if your margins drop too low it may be time to think about selling on.
The student market is turbulent at the moment but it looks like it will even out within a few years. Changes and speculation may cause some landlords to think about selling up but, generally, it looks like hanging on tight is the best bet at the moment.