Lack of Finance for Landlords

The lack of financial deals available to landlords could lead to an acute accommodation shortage in the next academic year.

With the summer holidays in full swing and UCAS’s recent announcement that university applications have risen by 11.6 per cent, many prospective students will be considering accommodation options for the coming year. However, the recession has created an economic climate where many landlords are struggling to finance private property investment, leading to a situation where demand for student property exceeds supply.

Many blame the banks’ restrictions on mortgages for the lack of properties in the private rental sector. The difficulties that plague landlords wishing to increase their investment portfolios will significantly affect students who rely on short term rentals. This is particularly problematic considering that most university cities can only provide about 65% of the accommodation needed in a climate where there is an increasing general demand for private rented accommodation.

In spite of the current environment, it is clear that student accommodation remains one of the most robust property sectors, with high levels of demand producing high rental yields and optimum rates of occupancy. Rental income from student property has increased by a consistent 5 per cent each year for the past six years. For landlords, students represent a reliable source of income as the majority are committed to a property for at least the duration of the academic year. Forecasts also show that student numbers will continue to rise in the coming years, especially in London and other major student towns such as Leeds and Sheffield.

Record-high demand for student accommodation has come at a time when universities are increasingly unable to cater for the accommodation needs of all their students, partially due to government austerity measures and universal cutbacks. This has shifted the onus for student property provision from the universities towards the private sector. Student accommodation management companies such as South Street will have an extremely important role to play in ensuring that students across the UK are well-provided for.