Will tuition fees kill of the buy-to-let landlord?

brit1234

WILL TUITION FEES KILL OF THE BUY-TO-LET LANDLORD?

By Hilary Douglas

THE sharp rise in student tuition fees to £9,000 a year could devastate the property market in university towns with cash-strapped parents unable to afford to rent flats for their children.

More and more students will opt to study near their family homes so they can live cheaply with their parents, and student numbers are set to decline by 40 per cent in some areas.

Landlord Assist, a specialist tenant eviction and rent collection firm, is warning student landlords to expect a potential casualty in the buy-to-let sector due to the tuition fees rise.

A knock-on effect could also see a downturn in house prices across the board, as parents no longer snap up property as a cheaper option to renting while their offspring are doing their degree courses. Student accommodation has previously been among the best performing sectors for landlords renting out properties, with high demand, full occupancy levels and good prospects for rental growth with student numbers swelling year-on-year, leaving accommodation at a premium.

More and more students will opt to study near their family homes so they can live cheaply

The typical student house was immortalised in Eighties TV comedy The Young Ones, starring Rik Mayall, with Alexei Sayle playing the landlord.
The expected fall in the number of student applications is already a near certainty, with more and more school leavers looking at ways to go straight into the workplace and for employers to pick up the tab for their training.

This, coupled with a surge in the number of undergraduates choosing to live at home, is expected to hammer the buy-to-let !market, which will impact dramatically on landlords’ incomes. It has also been predicted that property values overall in many university towns will fall, which will force downward pressure on rents.

The warning follows the Government’s decision to raise tuition fees by next year, with universities able to charge as much as £9,000 for certain courses.
In spite of assurances to the contrary, the latest figures reveal that at least three- !quarters of universities intend to charge the maximum £9,000 fees.

The rise in costs will undoubtedly make students more cash-aware than before, leading to greater competition for cheaper properties, putting landlords under greater pressure than ever to reduce rents instead of the normal annual increase.

Graham Kinnear, managing director of Landlord Assist, is concerned the fees will put off many undergraduates from pursuing higher education and may ruin many landlords in the process.

He said: “Many of the properties in university towns cater for the student market and landlords require a reasonable yield by way of rent to allow for the maintenance and repair that is invariably needed. Many landlords will have to try to reinvent themselves as a normal landlord, but this could take some costly changes. Also, with fewer students, those left will be able to insist on better standards.”

http://www.express.co.uk/posts/view/245318Will-tuition-fees-kill-of-the-buy-to-let-landlord#ixzz1LldbyWjc

Davesnave

"Graham Kinnear, managing director of Landlord Assist, is concerned the fees will put off many undergraduates from pursuing higher education and may ruin many landlords in the process.

He said: “Many of the properties in university towns cater for the student market and landlords require a reasonable yield by way of rent to allow for the maintenance and repair that is invariably needed. Many landlords will have to try to reinvent themselves as a normal landlord, but this could take some costly changes. Also, with fewer students, those left will be able to insist on better standards.”

I wish all this were true, but those of us who know student accommodation well will doubt the whole sorry wail. For a start, what is this 'maintenance and repair' of which he speaks? I have yet to see much evidence of that in private student accommodation! :rotfl:

I suppose a whole raft of unis will close down as well. No? Oh, of course, the kids aren't going to choose the most prestigious place, because they'll go local to stay at home with Mum. Course they will.;)

The reality is that, in many cases, next years accommodation is already fixed up. Done & dusted.......Well, not actually dusted....:o

OK, done over and dusty then, with a bit of mould thrown in!

brit1234

brit1234 wrote: »

By Hilary Douglas

He may be in the Daily Express bad boy books for not writing the usual vested interest tripe. Don't be surprised if he goes the way of a certain bbc weatherman.

julieq

Keep trying Brit.

Tuition fees won't have much on an effect on BTL, because BTL is feeding the residential market, not student lets which are relatively specialist. Even were tuition fees not a graduate tax in all but name in any case, which won't have any adverse effect at all on middle class parents (whatever they are).

And then we have the hysterically funny idea that "competition" for cheaper rents will somehow chase rents down. So you have two groups of student desperate to get the lowest rent and underbidding each other until they secure it do you?

I mean this is the Daily Express, I guess, which is sort of the Daily Mail's dumber younger brother but you'd think they might have grasped some of the basics of supply and demand.

Epic fail, as usual. I reckon your first time buyer strike will work better to push prices down. And that won't work at all either.

chewmylegoff

Who are the other members of the first time buyer strike?

brit1234

julieq wrote: »

but you'd think they might have grasped some of the basics of supply and demand.

Supply and demand

There is only so much land, we live on a Island

Immigration

Property prices only go up

You too could be a buy to let millionaire

Property is my pension

Can't go wrong with bricks and mortar.:whistle:

blah, blah blah



Its going to be interesting what happens, I personally think there will be an effect.

Rents were cheap when I was at uni and then buy to let came along and they shot up. 3-4 times what I paid.

the_flying_pig

i love the way that "...better standards" is painted as some kind of nightmare scenario.

chewmylegoff

brit1234 wrote: »

Rents were cheap when I was at uni and then buy to let came along and they shot up. 3-4 times what I paid.

I've no idea how old you are but if student rents have gone up 300-400% because of BTL that would be bizarre. The whole reason BTL is supposedly so evil is that it "steals" properties from ftbs and puts them on the rental Market instead. Why would this increase student rents? Increasing the rental supply - go on, explain how that pushes rents up.

I rather suspect if there is any one particular factor that pushed student rents up in the period 1997 to 2007 it is the fact that the number of students at uk universities increased from 1.5 million to 2 million. Whilst this may have coincided with the BTL explosion, I rather think an increase in demand of 33% might be a better explanation.

PasturesNew

There's a student studio flat I spotted the other day for sale, it rents at £650/month!!! What sort of students can afford to spend £650/month on renting a studio flat???

http://www.rightmove.co.uk/property-for-sale/new-homes/property-33633317.html

There's another one in that block that states it is currently achieving £515/month too.

leveller2911

chewmylegoff wrote: »

Who are the other members of the first time buyer strike?

Me.........I'm one and proud to be one too..........;) We have monthly meetings in the phone box outside the Red Lion Pub in Grimsby..

Until we get some reality back in the market I'm not playing the game.

chewmylegoff

PasturesNew wrote: »

There's a student studio flat I spotted the other day for sale, it rents at £650/month!!! What sort of students can afford to spend £650/month on renting a studio flat???

http://www.rightmove.co.uk/property-for-sale/new-homes/property-33633317.html

There's another one in that block that states it is currently achieving £515/month too.

Any student with loaded parents. So quite a lot of students really!