LATEST: Student HMOs in ‘rude health’ as pandemic weakens PBSA rivals

The fast growth in purpose-built student accommodation (PBSA) is unlikely to displace HMO stock, which continues to ©1999 - Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® - LATEST: Student HMOs in ‘rude health’ as pandemic weakens PBSA rivals | LandlordZONE.

LATEST: Student HMOs in ‘rude health’ as pandemic weakens PBSA rivals

The fast growth in purpose-built student accommodation (PBSA) is unlikely to displace HMO stock, which continues to attract the bulk of the student market, according to new research.

StuRents, which manages some 160,000 properties nationwide, estimates that there are 870,000 HMO beds in the UK, making up 70% of all private stock or 55% of all accommodation, which has proved particularly resilient during Covid.

It reports that enquiries from domestic students for HMOs followed the usual seasonal trend, while uncertainty around international travel, proposed teaching methods, and the pandemic resulted in a slow lettings cycle for PBSA – which tends to attract more international students.

’ annual report on the sector shows that the average weekly cost of an HMO bed increased by 3.4% year-on-year to £104 compared with a PBSA bed which increased by 0.2% to £158.

Calum MacInnes (pictured), founder of Student Tribe, says it doesn’t foresee PBSA stealing significant market share.

“Even if the PBSA players were to cut their prices, the desire of the domestic student to live with their mates in an environment which resembles the security of home life but with the excitement of being with your friends, who either live with you or near you, is an intoxicating mix,” says MacInnes.

The most important driver for investment into PBSA has been the unrelenting growth in Chinese students.

StuRent believes the biggest risk for PBSA operators is a decline in demand and notes the slowing annual rate of growth; in 2019 the number of Chinese students studying abroad grew by 6.3% compared to sustained double-digit growth a decade earlier.

Planning application activity across the UK has also slowed since 2016. In the first seven months of 2021, fewer than 15,000 PBSA beds were put forward compared with 32,000 for the same period in 2017. Activity in Coventry and Cardiff for example, has all but dried up, a sign that investors have moved on from these locations.

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Landlords ‘to pay higher mortgage premiums for properties below minimum EPC standard’

Landlords have been warned within the government’s Heatings and Buildings Strategy that they face having to pay ©1999 - Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® - Landlords ‘to pay higher mortgage premiums for properties below minimum EPC standard’ | LandlordZONE.

Landlords ‘to pay higher mortgage premiums for properties below minimum EPC standard’

Landlords have been warned within the government’s Heatings and Buildings Strategy that they face having to pay higher mortgage premiums if they buy or remortgage properties that do not meet minimum EPC standards.

The proposals are part of, and run alongside, the government’s plans to make Britain ‘net zero’ by 2050.

But despite 17 million out of the nation’s 29 million homes being EPC band D or below, the government expects the scheme to be voluntary and market-based at first, using the lure of lower interest rates offered by lenders to persuade landlords and home-owners to upgrade their properties.

The scheme will have to be ambitious to succeed – the government estimates the cost of upgrading these 17 million homes to be up to £65 billion.

But if the green mortgage scheme is not successful and housing stock upgrade targets are not met then the government is proposing to make it mandatory for lenders to have all properties within their managed portfolios reach EPC Band C by 2030.

The lending market is at least beginning to respond – some lenders now have ‘green mortgages’ which offer lower interest rates for eco homes But progress has been slow.

Effectiveness

“While green mortgages are potentially a good way of encouraging the implementation of energy efficiency measures, the current low mortgage interest rates in the market are likely to reduce their effectiveness in this regard,” says a spokesperson for the National Residential Landlords Association.

“The Government’s English Housing Survey confirms that the private rented sector has the highest proportion of older dwellings of all tenures, with 32% built pre-1919.

“The cost of upgrading these properties to the highest energy efficiency ratings is significant, and the savings of a green mortgage are unlikely to be sufficient to cover this.

“What is needed in the future is a more strategic approach which recognises the specific challenges facing many landlords in the private rented sector is needed.”

also proposes to prevent new-build homes from connecting to the gas grid in England from 2025.

A recently-closed on requiring all rented properties to meet a minimum EPC band C by 2030, with an announcement expected later this year.

©1999 - Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® - Landlords ‘to pay higher mortgage premiums for properties below minimum EPC standard’ | LandlordZONE.

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