Photo by HemCo Property Investments
With A-level results released last month, there have been numerous reports that students are facing a battle in finding accommodation – and some just aren’t being successful finding anywhere to live! This shows the major mismatch in supply and demand across the student lettings market, which has also pushed rents up further.
In this blog post, we’ll cover the current state of the student rental sector, including the HMO market. We’ll also include some tips to help you succeed as a HMO investor in this industry!
Supply & Demand in the Student Rental Market
Low supply and strong demand across the student lettings market has seen many students left struggling to find places to live. Undergraduates at some universities across the UK could be temporarily housed in hotels or even offered bunk beds in shared rooms, according to The Times.
Additionally, the latest research by Savills shows that there are 24.5% fewer homes available to let across the UK’s top 30 university cities compared to before the pandemic. At the same time, the number of full-time students has increased by 6.3% over the same period.
Toby Parsloe, research analyst at Savills, commented: “As students across the country digest their A-level results, the excitement will be building as many prepare to head off to university. However, many will face growing challenges in finding a place to live as continued high levels of university applications are putting increased pressure on already competitive rental markets.
“The UK has a record 2.3 million full-time students, 91,000 more than last year. UCAS applications have remained elevated since the pandemic, as economic uncertainty has pushed many younger people towards higher education to make them stand out in an increasingly competitive job market.”
The Renters Reform Bill is also expected to only worsen the supply with the student lettings sector. The removal of fixed term tenancies and requirement for open-ended contracts will introduce a significant challenge for student landlords.
Purpose-built student accommodation providers are set to be exempt from this proposal, but they are the only student housing providers who will still be able to offer fixed-term tenancies. So, this could further impact the number of homes available for students to rent!
Rents Continue to Increase
As there is such a strong imbalance between supply and demand, rents have been on the rise too. The latest NatWest Student Living Index revealed monthly rent for student housing has increased by an average of 30% since 2022.
The monthly average rate across the UK now sits at £591.90. London is the most expensive city for students to rent in with an average rental price of £840.30 per month. If supply continues to fall behind demand, rents are likely to remain high and maybe even keep increasing.
3 Tips for Succeeding in the Student HMO Market
The student HMO market comes with a whole raft of benefits for both tenants and landlords. And there are ways to help you see even more success than the competition. Here are three of my top tips to ensure you succeed as a HMO investor in the student sector!
1. Find and research opportunities within the market.
If you’re looking to expand your HMO portfolio and buy student HMOs, it may be helpful to research the location where demand is strong and supply is lacking the most. There is a real opportunity for HMO investors to create high quality homes for students and alleviate some of the pressure being seen in many university cities and towns across the UK!
2. Prioritise providing good value and quality homes.
Student HMOs can provide better value for students, particularly when compared to PBSA. As students are naturally on slimmer budgets, especially so during the ongoing cost-of-living crisis, providing good value is key. However, HMO properties should still be high quality, so create well-designed spaces with the right amenities for modern young people.
3. Improve your process for the summer changeover period.
The most challenging part of investing in student HMOs is the summer changeover period. This involves getting the existing tenants out of your properties and turning them over to your new tenants. It’s crucial to have an effective system in place to help you undertake this process as smoothly as possible!
If you have any questions about the student HMO market and what it’s like investing in these types of properties, join our free Facebook Group The HMO Community. For more helpful resources about investing in student HMOs and scaling your HMO portfolio, sign up for The HMO Roadmap!
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. 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!