Over the last couple of months there have been many conversations around the onus on students to pay rent for university accommodation during the coronavirus lockdown when they have returned home to live with their parents and are no longer using the property and facilities provided. It is a legitimate issue and most people can empathise with students facing this dilemma.
For students in university owned accommodation, many have had their rent and related fees suspended whilst the university is closed, however the scenario is more complex for those living in private rented property.
Tenants in privately owned accommodation are still required to pay their rent in accordance with the contract they have with the landlord. Some tenants were under the impression that because landlords were entitled to apply for a 3-month mortgage holiday on their buy-to-let properties, that they wouldn’t have to pay rent. This is not the case and tenants are still required to fulfill their obligations where they can.
A lot of landlords have been demonstrating support towards their tenants during this period and have been keen to find solutions that work for both parties. Although it is right to support the concerns of those who are no longer living in their student digs or struggling to pay rent due to the impact of Covid-19, it is important to also remember that most landlords depend on their rental incomes to support their own livelihoods.
The National Residential Landlord Association (NRLA) has recently conducted a survey of 4500 landlords which shows how tenants facing financial difficulties are being “supported by landlords willing to take a temporary financial hit.”
In the survey, 44 per cent of landlords have been asked for help by their tenants and 90 per cent of those asked had been able to provide it. The type of help been offered included rent deferrals, rent reductions, rent-free periods, early release from tenancies and refunds on HMO service charges.
The survey also shows that 54 per cent of landlords were experiencing issues with tenants paying rents or unexpected voids. Of those dealing with tenants falling into arrears, 60 per cent had lost at least a month’s rent.
This data clearly demonstrates the impact that the crisis is having on landlords and that they are doing what they can to support their tenants during this unprecedented period.
There may be further concerns for landlords who rent to students, especially those who normally provide HMO accommodation to serve the sector. Cambridge University recently announced that it would be running all its lectures online for the next academic year and other further education institutions are likely to consider similar approaches to delivering their courses.
The result of having lectures delivered online and maintaining social distancing measures will impact on the whole university experience that students normally enjoy, so the further education sector is likely to report a reduction in student admissions during the 2020/2021 academic year particularly from international candidates.
This gives rise to the question of how the demand for student accommodation will be impacted if fewer students are required to live near campus to attend lectures. It also leads to questions about whether landlords will move away from the student sector to focus on single family lets or professionals sharing properties, leaving a shortage in supply for those who do seek student accommodation.
It is difficult to predict with so many unknowns, but for those landlords already experiencing rental voids due to Covid-19 repercussions it is certainly something to contemplate, especially for those who own student HMOs. In a lot of cases, it may be financially untenable to convert HMOs back to a single family let as it is likely to devalue the property considerably. However, there is a growing trend for professional sharers opting to reduce their rent expenditure by living with others, especially at the start of their careers. Some HMO landlords may simply shift their focus onto this area of the rental market.
It is important that landlords feel confident to remain in the buy-to-let sector as we ease out of lockdown and start to recover from the impact of coronavirus. If too many decide to leave, it will only further fuel the housing crisis leaving more tenants chasing fewer properties.
The opening up of the UK housing market, including the lettings market, has been welcomed by landlords as the lockdown measures are easing and visual inspections are resuming. The government has published guidelines on how to undertake the various stages in the letting process such as viewings, safety inspections and tenancy check-ins. This should kick start the buy-to-let sector and there may be some good opportunities for landlords to expand their portfolios, especially if some sellers are keen to move quickly.