Is the Southampton Student Letting Market sitting on a timebomb!!

The student letting market in Southampton has always in the past been buoyant, with 40,000 students annually descending into Southampton to begin and continue their student life. Student letting has always been seen as somewhat high risk but with high rewards - your unit may get trashed but the rents and yields are good.
 Within Southampton city there are 7,000 houses in multiple occupation (HMO), numerous studios, 1 and 2 bed flats and an ever increasing number of purpose built student accommodation blocks. However we have seen, over the last couple of years, a growing number of student houses which have struggled to let.  Marketing of the student houses now begins much earlier – November 1^st as opposed to January 1^st in most other cities – and some Landlords are now offering discounts on the rent to secure a quick let.
So, where is the problem?  Well, student numbers dipped slightly when student fees rose to £9000 p.a. but, more importantly, the mix also changed whereby more overseas students were attending the universities.   These students were not willing to rent the traditional student houses preferring instead modern apartments or purpose built halls of residence on campus than that of woodchipped wallpapered 5 bed Victorian houses with one shared bathroom and draughty single glazed windows.  This is a trend that has continued over the last number of years and all students are now looking for a better quality student house.
Today’s students have a higher expectation of the quality they demand in their student accommodation. They expect their properties to be well looked after and maintained, with good décor and furnishings that are not old and worn and even wi-fi and televisions provided.  Students will not pay £85 per person per week for a draughty old house, with mix and ‘not match’ second hand furniture that has come from a clearance sale, threadbare carpets and the famous wood chip wall paper. Good student landlords in Southampton have recognised this and have invested in upgrading their stock and are achieving good rents with no voids – happy tenants equals happy landlords!
Come the summer, there will be student properties that haven’t let. At present there are still hundreds of student houses available to let, so as a Landlord of an unlet student house what are your options?
Well, before we look at the options, we need to be aware of the regulations and legislation specifically where the council imposed their Article 4 legislation a few years back, which means it is extremely difficult to get permission for a student houses in the majority of the city - not a bad thing given the overcapacity and the additional licencing requirement of small HMOs.
This is where the issue of Article 4 will kick in and potentially hurt the student landlord population. Landlords with an existing student property will be very reluctant to rent to a family if they are unable to get a student let as it will mean they will lose their HMO status as they will have changed the planning use on the property from C4 to C3 and Article 4 does not allow you to switch back without a fresh planning application if they want to put students into the property in the next academic year.
One option is to drastically reduce your asking rent to the £70’s, even £60’s per person per week, making your Southampton student let the bargain of the week for cost-conscious students. Or you could consider throwing some extras, like free Sky Sports or Wi-Fi or even a cleaner?
However, you will always be chasing your rent downwards over the coming years, as more and more purpose built modern halls of residences get built. If you are in the student rental game for the long term, one option would be to let the property go empty (this doesn't affect the HMO status) this coming Summer, spend time re-decorating and putting in new flooring and take your trailer down to IKEA on West Quay Road to make it show house style and take some fabulous internal pictures (for future marketing). In September relaunch the property back to the market targeting post-grad students or professional shares. It will go in days and at a full rent of between £90 and £100 per person per week. Don’t forget to incentivise your new tenants to keep the property ship shape when undergrads start looking in November for the next academic years. Again, if its top drawer, it will go quickly and at full price.
Every landlord and every property is different, but if you are a Southampton landlord with student property that hasn't let, now is the time to talk to the Letting Specialist Belvoir and consider the options that suit you and your property best. So feel free to pop into our offices on London Road in Southampton or email me at brian.linehan@belvoirlettings.com  for more information.

This article was published in the Daily Echo on the 9th April 2014