There’s a shortage of rental properties all over the UK, and the student rental market is feeling this pinch even more. The numbers paint a clearer picture:

• Currently, we’re lacking more than 200,000 student beds.
• By 2025, this number is predicted to be around 450,000.
• In the past, new student housing was being built regularly, but since the pandemic, the numbers have drastically reduced. For instance, 22,000 new beds in 2021 and only 15,000 in 2022.

Why is this happening?
There are a bunch of reasons. The big ones include:

• Slower planning applications for student accommodations.
• Limited available sites for construction.
• Oversupply in certain areas.
• Rising construction costs.

How are students feeling about it?
They’re pretty worried! Half of the students in a recent survey expressed their concern about this shortage. Some are even stressed to the point of thinking of dropping out because they can’t find accommodation.

Which places are most affected?

• Manchester: Big shortage! Around 4,000 beds short. Students were even given money to find housing elsewhere.
• Bristol: Some students might have to commute from Cardiff.
• Glasgow: The University can’t guarantee housing for everyone.
• Durham: Students stood in long queues just to get a shot at housing for the next academic year. They’re also very strict about how many houses can be converted into student accommodations.

So, is this all bad news?
Not if you’re a landlord or considering becoming one. There’s a silver lining.

The situation presents a significant opportunity for landlords to invest in houses in multiple occupancy (HMOs) for students. While purpose-built student accommodation is necessary for first-year undergraduates, there is also a high demand for private rented housing. Investing in student HMOs offers several advantages:

1. Higher yields: Rental income from student HMOs is usually higher than from standard lets. Charging on a price-per-room basis brings in more rental income, offsetting higher maintenance and management costs.
2. Minimal void periods: With a constant influx of new students each year, there is consistently strong demand in the student rental market. Students often sign twelve-month rental contracts, and they plan ahead for their next year’s accommodation, ensuring new tenants are secured well in advance.
3. Secure rental income: Student tenants are generally reliable when it comes to paying rent. They often have grants, part-time jobs, or support from their parents. Landlords usually make students jointly and severally liable for the total property rent, providing financial security. Additionally, landlords can ask for parents to act as guarantors for an extra layer of protection.

In light of the shortage and the potential benefits, investing in student HMOs could be a profitable venture for landlords.