By Ruishan There have recently been myths and rumours surrounding HMOs, particularly student rentals, since the first lockdown. This has had an impact on the future demand for these types of rental properties. I have heard many landlords suggest that as the pandemic continues, & a possible recession approaches, it is the end of the road for HMOs. I do not believe that is the case. Let...
Ruishan
There have recently been myths and rumours surrounding HMOs, particularly student rentals, since the first lockdown. This has had an impact on the future demand for these types of rental properties.
I have heard many landlords suggest that as the pandemic continues, & a possible recession approaches, it is the end of the road for HMOs. I do not believe that is the case.
Let us consider the challenges currently faced by student HMO landlords. I will offer my expert opinion & share some top tips for maximising the value of these properties.
“Universities are adopting virtual learning platforms”
Both universities in Norwich are currently delivering most lectures online. Most landlords assumed that students will therefore choose to stay with their parents while continuing to study online. In our experience, even during the current pandemic, students have been more eager than ever to take up their students accommodation following an extended period of living with their parents. They could not wait to regain the freedom of living away from home. As such, they are continuing to choose to move into HMOs.
“Foreign students are deciding not to turn up”
We have seen an increasing number of foreign students deciding to take up their place with universities whilst they continue to study online in their home country. This is likely to continue in 2021 – with the discovery of the highly contagious variant of the SARS-CoV-19 virus as well as the imposition of travel bans around the world.
“Continuing changes to HMO & letting legislation presents challenges”
The changes to HMO legislation have continued at pace with the introduction HMO licensing in 2018 followed by the mandatory Electrical Installation Conditions Report (EICR) for new tenancies in 2020 to include all existing tenancies before 1st July 2021. Right to rent document requirements keep changing. Regarding the current ban on section 21, there is a consultation going on in the House of Commons about repealing section 21 & replacing it with section 8.
There is also the question of how making tenant deposits transferable between properties is going to affect student properties as they move more frequently than non-student tenants.
“Private landlords are presented with competition from purpose-built student accommodation providers”
This new-found Purpose-Built Accommodation (PBA) investment is now extremely evident in Norwich city with a spate of development and applications to build student accommodation throughout the city and further afield. One of the largest developments, the former Aviva Towers in St Stephens Street, which currently has a further 700 homes for students and was completed at the cost of £45m. A further two developments, one next to the Premier Inn on Duke Street and the other at St. Crispins are also now partially completed.
There have now been over 3000 purpose-built accommodation rooms constructed in Norwich since 2019. Investors have recognised the solvency of the purpose-built accommodation market and that students are more prepared to pay for a quality environment – especially those who are international students.
This is where we, a specialist agent, can make all the difference to landlord’s investment strategy. There will be many more purpose built student accommodations coming to Norwich with the recent closure of some major high street retailers.
Purpose built students accommodation has not only increased competition for landlords of traditional student properties, but it has also helped improved the quality of student properties across Norwich.
Opinion: “Demand for HMOs will drop in a recession”
If property prices are going to fall (as most property commentators are forecasting) then it is likely demand for HMOs will grow. Past evidence has shown that residential rental demand increases in recessions. More people prefer to rent rather than buy during a recession.
Research by the Royal Institute of Chartered Surveyors (RICS) showed that following the 2008 recession there was a continued rise in tenant demand.
Recessions see growing demand for rental properties, especially affordable rental property such as HMOs.
In my experience, the people claiming the HMO market is saturated have sub-standard properties in the wrong areas or not in good locations near to either the University of East Anglia or Norwich University of Art. Either that or they do not have any HMOs at all. It is clear that the HMO & student market remains stronger than ever for good quality properties in great locations. If you have an HMO, or are planning to buy one or convert an existing property, what do you need to do to be successful?
Here are my tips for small steps that can make a big difference!
A functional workspace
Now that people are more likely to be working or studying from home, having a desk as well as an attractive work area with fast broadband is important. If necessary, add extra lighting to ensure the workspace is sufficiently illuminated. Add a few extra sockets if needed for laptops, phones, & other IT paraphernalia.
As much kitchen storage as possible
Ensure there are enough kitchen units to provide suitable storage & include a fridge as well as a freezer. It is surprising how many landlords do not supply adequate kitchen storage. If your kitchen is small, look at clever ways to maximise the storage space – there are loads of ideas from places like NRLA & IKEA. Thinking about the little things that make life easier can make a huge difference to your tenants.
Open your properties to a wider audience
With Norwich & Norfolk University Hospital continuing to recruit medical professionals in the wake of the pandemic, all these professionals need accommodation to rent & most of them will find shared accommodation preferrable due to affordability.
First-class service
This is the one that will make your properties stand out. From the first viewing to moving in, be proactive & attentive. Once they have moved in, do not think that your job is done! Look after them, make the experience of living in your property one they will remember & cherish. This helps housemates stay longer & also leads to referrals.
Appoint a specialist Agent.
You will need an agent that is committed to the letting & management of HMOs – especially student properties – to ensure that you are getting the most out of your investment.
A specialist agent will advise on what changes to make in your property to keep up with today’s market in order to achieve premium rent as well as market your property to the right audiences (be it students or other) They should embrace the latest technologies to incorporate video viewings, online tenant referencing, digital contract signing, as well as ensuring that your property complies with all legislation surrounding the letting & management of HMOs.
A specialist agent should evaluate your portfolio. They will advise you on what to keep, what to sell, & what to buy.
Melanie Estates is a specialist HMO & student property management agency, currently working with a blue chip company taking on properties in Norwich to fulfill a government contract.
Melanie Estates has the capacity to take on new HMO landlords due to increased digitalisation. This includes virtual viewings, online tenancy applications, contract signing, & the automation of maintenance processes. Every new landlord will get a free HMO risk assessment of their property.
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