Student buy to let has been one of the better areas in which to make property investments in the UK in recent years. Not only do student lets offer higher rental yields than lets to families, but they have also often required lower capital spending. In today’s tough market conditions it has proved to be one of the few attractive areas in buy to let property investing left.
Yet new rules proposed by the government may seriously hamper this market. Under the current proposal landlords will have to obtain special planning permission to let a house to three or more people who are not related to one another (in other words to anything other than a family). The proposal is to end what has popularly become known as “studentification”.
This is a phenomenon, most common in university towns, where large numbers of students congregate together and take over parts of the town. The fact that they do is not surprising since they want to be near one another and also near to their campus. Quite why the government sees this as such a serious problem is not clear, since students are in fact no more or less likely to be noisy or bad neighbours than anyone else. Previous government studies have proved just this point. Census figures cited by the government also prove the point showing that only a tiny proportion of towns have student populations that take up more than 10% of the total housing.
Nevertheless the government says its concern is to tackle pockets of unsafe and substandard accommodation. It is particularly concerned about towns such as Leeds, Bristol and Nottingham. Yet it provides precious little evidence to back up its claims that students are drunk and cause a nuisance.
The plan has provoked a storm of criticism from landlords. The Residential Landlord’s Association worries that the move is bad for landlords and for tenants. It says that “Nurses, teachers and a generation of young workers could be hit by a government plan to prohibit areas of shared housing for groups of unrelated tenants” and is calling on landlords to lobby their local political representatives.
The situation may yet change but until there is greater clarity it may be sensible to avoid making any investment decisions relating to student buy to let before April.