As a letting agent specialist, we have a broad view of the whole buy to let market. We are fully aware that with recent changes from the government and the cost of living crisis, landlords are feeling the squeeze, especially if student HMO’s are concerned. Here’s why we would urge all student landlords to seriously consider swapping to family lets, and sharpish…
1. Game-changing proposal from the government
Recently the government released its ‘Fairer Private Rental Sector’ white paper, the contents of which, if implemented, could have a catastrophic impact for student landlords. Proposals include removing fixed term contracts all together, instead having periodic agreements which see the tenants give just two months’ notice to exit the tenancy, at any point.
How exactly is a student landlord meant to obtain financial security, when he/she can’t secure student tenants for an academic year? In the absence of fixed term contracts, he/she can’t guarantee availability to future students as they have no idea when the current tenants will give their two month notice.
We are all for equality and fairness, but some of the suggestions in this white paper put the power entirely in the hands of the tenants, leaving landlords with little to no financial security.
Whilst the proposals in the paper would impact the entire private rental sector, the nature of student lettings mean they could be particularly troublesome. As such, our view is that family lets are the safest bet. Families are more stable and looking for longer term rents, however, if a family were to give two months’ notice you are much more likely to fill it with another family, regardless of the time of year. Something to consider perhaps…
2. The big squeeze
You’d have to have been living under a rock to not notice the cost of just about everything going up, perhaps most noticeably food and utilities. For the majority of people nationwide income is not going up at the same rate and for students, this is a particular challenge, with many either not working or just working a part-time role alongside their studies.
Whether you’re a student landlord that includes utilities in your rental fee or who asks your tenants to sort the utilities themselves – they, and you, are very vulnerable to being stung by the current economic situation. While there are no guarantees for anyone, there are certain assumptions and background checks that can be made for family tenants to ensure they are in a position to pay their rent, thus offering you some peace of mind at an uncertain time.
3. Family fortunes
The benefits of family lets, when compared to student lets at this moment in time, are far outweighed. For one, student lets tend to last 12 months max, in line with their academic year, whereas we’ve got landlords who’ve had the same family in their property for years. While there’s no guarantees it’s much more likely to secure a longer-term tenant in the family letting sector.
Secondly, family rents have increased considerably due to cost of living and increased demand so now is a good time to be a family landlord. The appetite for three+ bedroom homes is there and if managed and marketed correctly you should be able to get a good rental income from your property.
In times of crisis and uncertainty we live by the mantra of ‘control the controllables’ and switching your student let to a family let is doing exactly that. If you have any questions about the above then please don’t hesitate to contact our experienced team who would be more than happy to help you.