University fee hike could effect landlords

Landlord Expert
By Landlord Expert April 16, 2011 18:18

Landlord Assist, the nationwide tenant eviction and rent collection firm, is concerned that rises in tuition fees could have a damaging effect on private landlords with properties in ‘university towns’.

Following the government’s decision to raise tuition fees by 2012, English universities will be able to charge as much as £9,000 for certain courses.

Speculation has been rife about the impact the rise in university tuition fees will have on undergraduates but another potential casualty of this change could be the buy-to-let sector as many would-be students may be priced out of Higher Education.

A decline in student applications could lead to a situation where there aren’t enough students to support the buy to let market in certain areas of the country and this will impact landlords’ income.

At the same time the rise in tuition fees may make students more cash-aware than before, leading to greater competition for cheaper properties. Subsequently landlords will be under increasing pressure to reduce their rents in order to attract tenants.

Graham Kinnear, Managing Director at Landlord Assist, who has long been a supporter of student accommodation, is concerned that higher tuition fees will put off many undergraduates from pursuing Higher Education and the resultant demand may drive down rents in some locations.

He says: “It appears that the vast majority of universities, including former polytechnics, are proposing to charge the maximum in terms of tuition fees and this will have a disincentive effect for those considering entering Higher Education from 2012 onwards.

“Many of the properties in university towns specifically cater for the student market and landlords require a reasonable yield by way of rent return to allow for the maintenance and repair that is invariably required.”

Stephen Parry, Commercial Director at Landlord Assist says: “If the number of students diminishes significantly in some university towns there would be a real glut of property available on the rental market. This would reduce the rents achievable and put more financial pressure on landlords.”

“Many landlords that rent to students have purchased properties using buy you let mortgages, and an exodus of students may lead to many landlords falling into arrears with their lenders if they are unable to find suitable tenants.” 

 

Landlord Expert
By Landlord Expert April 16, 2011 18:18

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