Photo by J.O. Property

With unparalleled demand for university accommodation, there have been warnings over a shortfall of accommodation for university students. What does this mean for the student rental market and particularly student HMOs?

Recently, it’s been reported that a record 2.18 million full-time students are currently studying at UK universities. And 1.63 million of those are studying away from home and will require bed space during their course of study, according to Cushman & Wakefield.

UK rental guarantor service Housing Hand warned that A-level results could trigger a tsunami of students struggling to find accommodation for their university places as there is an imbalance in supply and demand. 

In this blog post, we’ll cover the numbers behind the student rental market, the value of student HMOs, and the role they can play to help keep up with growing demand. We’ll also include some tips to help you stay ahead of the increasing competition among HMO landlords!

The Current State of the Student Rental Market

In recent years, the UK student rental market has been booming, and demand and rent are reaching unprecedented levels. There has been a surge of student lets causing average rental costs to break records. This is being fuelled by a surge of high-value student lets, according to Goodlord.

In July 2022, the average rental price in England increased by a significant 17.2%, which is the highest amount ever recorded by Goodlord’s Rental Index. With this high demand, void periods have also been at record lows. 

Currently, there’s a shortage of 207,000 student beds, according to research by StuRents. A rising number of students heading to university, paired with a slowing supply of new student rentals, means that the UK will face a shortfall of around 450,000 student beds by 2025. 

The Value of Student HMOs

These figures show the huge amount of demand for student accommodation and the value of student HMOs. The current supply of student lets isn’t keeping up with the ever-increasing demand. This will likely mean that the student HMO market will grow even further in the years to come. 

With the number of full-time students in the UK on the rise, demand for accommodation is only going to increase. HMO properties are one of the areas where we can create new rental units, which can help alleviate the pressure currently being seen in the rental market.

Overall, the student HMO market comes with extensive benefits for both tenants and landlords. Personally, it’s by far my preferred method of property investment. My very first deal was a student HMO, and I’ve been investing in these types of properties for more than a decade now. 

There is significant value in the student HMO market, and one of the top reasons I absolutely love investing in student HMOs is because it’s a pretty safe bet that universities aren’t going anywhere! This helps build a huge amount of rental confidence in your portfolio.

3 Tips for Staying Ahead of the Competition

With more landlords likely to enter the student HMO industry, this will make the market more and more competitive. But you don’t need to be fearful of this! It can actually create opportunities for us. 

Moving forward, standing out and providing great accommodation and a great service to tenants will be more important than ever. As it’s becoming increasingly important to stay ahead of the competition, here are a few of my top tips to help you do just that!

1. Provide Good Value & Quality, Modern Homes

If you create high-quality, well-designed HMOs that provide not only good value but also what modern tenants are looking for, this will help you have more success. Your property needs to be up to standard and offer everything students are looking for.

Students are wanting more than just a roof over their heads. They want a comfortable place to call home, with all the amenities that come with modern living, so make sure you offer high-quality furnishings and appliances. Also, keep an eye on changing trends within the student rental market, particularly in your local area. 

2. Improve Your Property Management Service

Providing a superior property management service is key to keeping up with the competition. You must stay on top of maintenance and repairs to ensure properties are safe and liveable but also so tenants are content living in your property. 

With that in mind, HMO landlords need to be responsive and proactive. Find ways to improve your systems and processes to ensure maintenance is always managed quickly and efficiently!

3. Consider Energy Efficient Improvements

Investing in energy efficient improvements for your HMOs could create greater demand for your properties moving forward. With the cost of energy continuing to soar, these improvements could help you and your tenants make savings on these bills, which will be particularly important moving forward as the cost-of-living crisis ensues.

On top of that, many young people are also wanting to live more sustainable lives. A HMO with a better EPC rating or more green features will likely be more attractive to those who are energy conscious. 

If you have any questions about the student HMO market, head over to The HMO Community Facebook Group. And for more helpful lessons and resources on how to start, scale, and systemise your HMO portfolio, become a member of The HMO Roadmap today!

About the Author:

Andy Graham is the founder and the lead trainer at The HMO Roadmap! He is also the co-founder of The HMO Mastermind and Smart Property, a specialist HMO property investment and management company. He writes as a regular columnist in different magazines about a variety of HMO topics and is the host of The HMO Podcast! Follow Andy on Instagram!