Friday, August 28, 2009

Should I be a student landlord? UK

Posted by Catherine Deshayes on Wednesday, August 19, 2009

Many large portfolio landlords have started as student landlords letting their property to hoards of marauding students. The question for many parents of students looking to go to university this year or other property investors or landlords is should I join the ranks of student landlords?

Growing student letting market
There is no doubt that the student letting market continues to buck the trend in other areas of the economy. The resulting down turn has resulted in record numbers of students applying to enter higher education this year.

The latest figures show that application for degree course are up by 57,000 on last year as the economic downturn results in many students putting off work or ‘upskilling' in an attempt to avoid the dole cue.

According to Knight Frank the UK student population has grown consistently over the last 10 years. Total student numbers have grown from 1.8 million in 1997 to 2.5 million in 2007. Savills expect this to hit three million full and part time students by 2014.

Growth has been driven in the main by domestic UK undergraduate demand. However, there is a trend to rising numbers of foreign student, with participation of overseas students at UK universities rising 67 per cent over the past decade.

Knight Frank research shows that in 1997 they accounted for 11 per cent (international students) and 21 per cent (postgraduates) of all students; by 2007 these figures had increased to 15 per cent and 24 per cent respectively.

Both international students and postgraduates are more likely to opt for purpose built private student housing rather than shared houses. Foreign student numbers are expected to grow from 15 per cent of all students in 2008 to 21 per cent by 2018.

Knight Frank in their Report produced this year estimated that London alone requires an additional 100,000 student bedspaces.

Student lettings niche letting market
Letting to students is a very niche part of the private lettings market requiring particular skills and an approach. It's more complex and potentially involves the landlord complying with a greater deal of regulation than a standard buy-to-let.

This is because many student lets will be classed as a house in multiple occupation (HMO). Landlords letting certain types of HMOs are now required to be licensed by their local authority. In order to obtain an HMO licence landlords will have to meet certain fire standards and accommodation standards that can be expensive to comply with. For example this can often involve having a newly installed fire alarm system and fire escape costing tens of thousands and also potentially taking value of the property because of it would then be no longer attractive to the owner occupier market.

Therefore for many first time landlords they should avoid investing in a property that is a potential HMO. The easiest way around this is to ensure that they only let their property to 4 or less student tenants as a rental property can only be classified as a HMO if let to 5 or more tenants.

In addition, student lets require a greater amount of supervision and management input. This is because student properties have a greater turnover of tenants than many buy-to-let properties occupied by professional tenants.

In addition many student lets will be required to be furnished. The level of furnishing is often specified by the university and landlords will need to comply with standards set out by the student accommodation office in order to be featured on the universities accommodation list circulated to many students looking for accommodation.

Students can make good tenants:
A student landlord can fit more student tenants into a property. A 3 bed house will frequently accommodate 4 sharers - and that's without letting the cupboard! This is more intensive than a let to a single tenant or even a house of professional sharers which can have a potential benefit on the investment yields.

Student tenants aren't quite as fussy. Students particularly undergraduates have tended not to be as fussy as professional tenants. These type of tenats are more prepared to put up with slightly outdated kitchens and colourful bathroom suites than design conscious professional tenants.

However, landlords shouldn't be complacent; with the advent of more and more private halls standards are rising and mature and foreign students often demand professional levels of accommodation.Student tenants sometime pay rent in advance.

Some student tenants or more accurately their parents will often pay upfront for each semester or term. This is handy for a landlord as they have the rent in advance with which to pay any mortgage or other costs.

Student tenants are bright. This in theory makes dealing with them and sorting out problems easier. Catherine Bancroft-Rimmer, author of The Landlord's Guide to Student Letting comments "You do get exceptions," "but once you've explained why you need them to do something they are usually quite willing to go along with it." From my experience there is nothing worse than trying to resolve a problem with a thick tenant. The phrase "like pulling teeth" comes to mind.

Student rental accommodation supply
There is no doubt that in many areas supply of rental accommodation by student landlords has failed to keep up with demand. This is especially true in London where a recent report by Knight Frank highlighted a shortfall of 100,000 bedspaces in London alone. However, like many aspects of buy-to-let investment the fundamentals of any market are essentially local.

Therefore a prospective student landlord should ensure that they do their own local research by talking to local rental agents and University Accommodation Offices before factoring in their expected rents to their investment calculations.

The competition amongst student landlords renting to students in some areas is a very strong. Some areas are already oversupplied according to Simon Thompson Director of Accommodation for Students.

"Leeds is quite overpopulated with student accommodation, as are the Fallowfield and Withington areas of Manchester."

Universities and increasingly private developers are constructing purpose built halls of residences. These aim for the top end of the market but none the less it is worth a landlord talking to the local planners to find out what is in the pipeline.

Student rent levels
The strong demand for student lettings and the shortage of supply has resulted in rents growing 10per cent in London where the shortage is particularly acute as London is the premiere centre for student accommodation in Europe with over 40 universities. In the rest of the UK rent level growth was less strong growing by only 8 per cent but still outpacing the rest of the residential investment market where rents actually fell by almost 2 per cent over the last year according to the Rentindex.

The latest figures on student rents released by, the UK's No 1 student accommodation website, reveal that the average UK weekly student rent continues to rise. At £62.40, their figure is up 1.5 per cent on last year and 19 per cent on the comparable figure five years ago. AFS figures are based on rents from over 51,000 properties across 75 cities in the UK and includes figures from purpose built student accommodation and private landlords.

The ideal type of property for a student landlord
Student tenants generally prefer to go into Halls for the first year after which they then look for accommodation in groups of 4 or 5. Our research shows that different student groups have varying accommodation requirements.

Post graduates for instance frequently prioritise a peaceful working environment and their demands are very similar to that of professional renters. Undergraduates are more likely to request accommodation located close to entertainment facilities and town centres and are more willing to live in larger shared properties.Location is often a key factor. Students like to be near each other. Chris Horne Editor of expert landlord website Property Hawk says, "If you can find out where the ‘cool' bars and places to hang out are; then a property close by will definitely have a marketing advantage. Essential is that your property has good access by public transport to the University campuses as well as the night life and basic shops and services. Not all students have cars!"A three bedroom property is probably ideal. This is because with a little bit of work, it should be possible to convert one of the ground floor rooms to an additional bedroom thereby allowing you as the landlord to accommodate 4 students. If you provide accommodation for 5 or more students, then you will very likely have to obtain a licence for your property as a House In Multiple Occupation (HMO).

This in itself is not a disaster in that it will probably only cost a couple of hundred pounds from the local authority. However, what could be more difficult is that in order to obtain the licence the Local Authority may insist on certain minimum standards in the property. Examples of this are sinks in every bedroom along with other expensive fire safety measures.

These works will not only be costly but potentially they will detract from the attraction of your property to the owner occupation market when you come to sell. To avoid this most student landlords are best advised at looking to keep the maximum number of student renters to 4. The exception to this might be where a landlord was looking at making it into a more involved commercial undertaking in which case buying an already licensed HMO would probably be cheaper and make more sense.Victorian terraced properties often provide ideal accommodation for a student landlord because of the generous room sizes. Large spacious rooms are particularly appealing to students as these are often more than just a place to sleep. In theory they will be places of study and also their private space to retreat to when all the partying and communal living gets too much! Landlords should therefore look for properties with 3 generous double rooms and one living room that can be converted to this.

Insuring your student rental property
Insurance is also an issue. Finding the right landlord insurance is essential as not all insurance companies are keen on student tenants and they may impose higher excesses or charge higher premiums where students are involved.

It is absolutely essential to ensure that a landlord insurance broker is fully aware of the position if you let to students. This is because many insurers consider that the type of tenant to be a "material fact". This means that if there is a claim and you have not disclosed this, they can quite legitimately seek to repudiate a claim.

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Tuesday, August 18, 2009

No royal treatment for Princess Eugenie

The Journal

STUDENT digs are not known for being plush, but the ones in Newcastle have been given the royal seal of approval.

Princess Eugenie starts her degree at Newcastle University next month and has taken up a place in a £96-a-week hall of residence.

The 19-year-old, who is sixth in line to the throne, says she wants to be treated just like any other student and will be sharing a living room and kitchen with five other undergraduates.
The Queen’s granddaughter will have her own small en-suite bedroom with a single bed, wardrobe, chest of drawers and desk.

Her choice of accommodation is in stark contrast to her big sister, Beatrice, who turned down digs at London’s Goldsmiths College last September and moved into an apartment in St James’s Palace. However, Eugenie’s move to the halls won’t be cheap, as she’ll be joined by a team of Metropolitan Police bodyguards, costing more than £250,000 a year.

The guards, who will be with the princess around the clock, are relocating to Newcastle. Last month, two detectives travelled to the city with Eugenie to look around the campus and inspect her future accommodation.

Eugenie plans to study for a BA in English and history of art. A number of her friends are also thought to be coming to Newcastle.

Fortunately for the party-loving princess, the university also boasts one of the best student social scenes in the country with six bars to chose from.

Eugenie achieved two As in her A-levels in art and English literature and a B in history of art. Her gap year saw her partying in places as far flung as Australia, South Africa, Cambodia and Goa.

A friend said: “She chose Newcastle because it offered a great degree course and it seems a really fun place to go. Eugenie is a very down to earth girl who hates using her title and she was adamant that she wanted to live in halls with her friends. She just wants to be treated like any other undergraduate.

“The issue of police protection is totally out of her hands. She hates it as much as anyone.”
Eugenie is not the first royal of her generation to take up a place in halls of residence. Prince William spent his first year in university accommodation when he went to St Andrew’s.

On the princess’s move to Newcastle, the city’s Lord Mayor, Mike Cookson, said: “Newcastle is a beautiful, lively, safe and welcoming city, which is justifiably popular with students.

“We’re very pleased that the princess will have the opportunity to experience all of this for herself.”

A Newcastle University spokesman said he couldn’t comment on any individual student.

Thursday, August 6, 2009

Recession boost for student towns

University cities defy property slump as new graduates snub tough jobs market, reports Hilary Osborne

The Observer, Sunday 2 August 2009

The recession has had a big impact on the property market, but one sector appears to be benefiting from the downturn. Demand for student digs is rising due to an increase in the number of A-level students going on to further education and new graduates snubbing the jobs market in favour of a higher degree.

"Undergraduate [course] applications rose 9% in the 2008/09 academic year and are forecast to continue growing," says Lucian Cook, director of research at property firm Savills.

"Postgraduate numbers are expected to see a similar surge in response to weakness in the jobs market. Purpose-built student accommodation has failed to keep up, diverting students into the private rental sector where they compete with aspiring first-time buyers."

This is the case at the University of St Andrews, on the east coast of Scotland. Local estate agent Ian Morton, a partner at Bradburne & Co says the university saw a surge in numbers last September and this year could be equally busy. "People are not taking gap years because they realise it is hard to get a job," he says. "Last year there was a major shortage of accommodation and the university had to rent from the private sector."

Rents are high - top digs fetch £500 a month, a room - so investors and parents are still keen to buy, paying around £150,000 for each lettable bedroom.

Scottish government figures for the wider area of Fife show property prices are down just 0.8% year on year, against a fall of 4.4% in Edinburgh.

Prices are also holding up in the student areas of Nottingham, according to Paul Perriam, area director of estate agent William H Brown.

"The core student area is Lenton. It is primarily Victorian terraced houses which are now almost entirely given over to student accommodation," he says. "Prices have held up really well - they have come down, but not to the extent of the general market." According to Perriam, a room in a good property can attract £75 a week .

In Canterbury, Mark Weller, an area partner for Connells, says several investors have added five or six student homes to their portfolios this year. "Properties suitable for student buy-to-lets are selling quickly, particularly three-bedroom semi-detached and end-terrace houses, that can be extended or converted in some way to produce four- and five-bedroom properties," he says.

But there are signs the general slowdown is having some impact, even in St Andrews. Morton says some parents who had planned to sell up as soon as their children left university have opted to hold on to property while they wait for an uplift in prices.

In Norwich, where students at the University of East Anglia flock to an area called the Golden Triangle, Joanne Pennells of haart estate agents says fewer properties have come back on to the market than in previous years.

Just as the student property market has specific drivers, it also has its own threats. One problem is that universities are creating more accommodation for second and third-year students.

In Durham, building by the university has led to a fall in demand from investors and parents, says Geoff Graham of estate agent JW Wood. "There seems to be a bit of an oversupply," he says. "Landlords have been finding they can't get tenants, or where they would have five in a house they are now getting three or four, or the rents they can get are lower."

Another potential problem in England is proposed changes to the rules on houses in multiple occupation (HMOs), which form part of a government consultation set to close on Friday.
The change, designed to reduce the "studentification" of large areas of towns, would force anyone letting a home to more than three unrelated people to get planning permission to make their property a HMO - now this only applies if there are six or more tenants.

Giles Ferin, a planning specialist at law firm EMW Picton Howells, says it could have a serious impact on the property market if the government adopts the proposals. "A lot of parents buy properties for little Jimmy or Jenny to live in while at university, and rent rooms to their friends to cover the mortgage costs ... this would potentially scupper that. If the number of people you need to cover the mortgage is going to be your child, plus more than two others, you are going to have to get planning permission."

This will add extra cost and time for the first set of people converting these properties and will mean they can't go back on to the market as regular homes. It's by no means a done deal that the rules will come into force. But if they do, they could be a bigger concern in many university towns than the recession.

Swine Flu - Facts

Basic facts about the new fluWhat is novel influenza A/H1N1?

This is a new flu virus infecting humans. It was first detected in humans in the US in April, 2009, but was probably causing infections in Mexico for a period before this.

Initially this new flu virus was thought to be a type of flu virus that infects pigs and sometimes spreads to humans (hence the initial name of "swine flu"). However, further studies have revealed that it is not a virus that came directly from pigs but is rather a new virus formed by the recombination of several different genetic elements from pigs, avian and human species.

What are symptoms of the H1N1 flu - swine flu?
The symptoms are not different from those of seasonal flu. They include fever, muscle and chest pains, cough, sore throat and headache. It is only in rare cases that you will find a person infected having diahorrea and vomiting.

How does the H1N1 virus spread?
Available information on this new virus suggests that it spreads from person to person much like "seasonal influenza" which is mainly via respiratory droplet transmission. Just like seasonal flu it is airborne and spreads through coughing and sneezing by an infected person. When sneezing or coughing, an infected person releases respiratory droplets into the air and the next person will be infected by breathing in those droplets. In addition, infection can result if there is contact with inanimate surfaces such as door knobs or hands that are contaminated with the flu virus and then the person touches his or her mouth, nose or eyes.
The virus can also be contracted by coming into contact with an infected person or even by talking to one. It can be contracted from a contaminated hand after an infected person has coughed or sneezed on that hand.

How long can an infected person spread this virus to others?
At the current time, it is believed that this virus has the same properties in terms of spread as seasonal flu viruses. With seasonal flu, studies have shown that people may be contagious from one day before they develop symptoms to up to seven days after they get sick.

Children, especially younger children, might potentially be contagious for longer periods. It is therefore important for people to stay at home for at least seven days when they have symptoms to reduce spread to other people.

What if it goes undetected or untreated?
The majority of patients experience mild symptoms and make a rapid and full recovery, often in the absence of any form of medical treatment.

Is there a need for the public to panic?
Experience in other affected countries indicates that this virus spreads rapidly through communities. It is not possible to contain this virus by quarantine of contacts and travel restrictions. Social distancing of affected persons, usually by home isolation, may to some extent reduce spread. From the experience of this disease in other countries, spread is inevitable.

What age group is mostly affected by the virus in South Africa?
Although older people were commonly the most infected with seasonal flu, the H1N1 virus is now affecting young people the most.

How can the virus be prevented from spreading?
Cover your nose with a tissue when sneezing, and mouth when coughing, to prevent the infected droplets from being released into the air. Make sure you dispose of the tissue.

Answers by Professor Barry Schoub, a director of the National Institute for Communicable Diseases, a division of the National Health Laboratory Service
This article was originally published on page 1 of The Star on August 04, 2009