I own a student HMO – should I sell it?
Many countries, including in the UK, rapidly shut schools as pandemic death tolls swiftly rose. Temporary measures, we were assured, and things would no doubt return to normal, come September. Now, that’s being called into question.
According to a University and College Union-sponsored poll:
That’s a whopping 120,000 students electing to put off their undergraduate studies until universities open their grounds and it’s considered safe to assemble, without social distancing.
Those are just students who have yet to attend university. If we add to that returning university students who may also consider deferring, those 120,000 new students are but the tip of the iceberg.
#cambridgeuniversity has already announced that all lectures for the 2020/21 academic year will be strictly online. For student HMO owners, that translates to empty student properties, many with limited back-up strategies to continue to keep them viable.
Each university will decide for themselves how to proceed, but with university education being as expensive as it is (£9,250 per year for citizens; between £10,000 and £26,000 for foreign students), it’s understandable that students won’t see the value in spending that much money to sit in student housing and watch their lectures on Zoom. Where are the interactive options, the lab work, the creative opportunities? And who could blame them?
Niall Scott and I have noted the increasing number of student HMOs for sale. But what if you don’t want to sell? What are your options? When you have assets that you look to hold for the long term, surviving the short term becomes your priority.
You could rent to professionals, sure, but with the already high number of rooms available to professionals, marketing your property to them may simply serve to overload an arguably already saturated market in places.
Short-term let and serviced accommodation (SA) will also be limited, due to fewer tourists and workers moving around the country. You only need to speak to an SA operator to know the pains they feel right now. The prospect of adding more properties to this marketplace fills them with dread!
One strategy would be to work with the local council or a housing association to provide accommodation, emergency or otherwise, to those in need. This would keep some money coming in – maybe even the same as before, or, if you’re lucky, more.
Property is a great long-term asset. Prices recover; rental demand increases over the long term. Instead of selling (which for some is their knee-jerk reaction), assess the situation and find a way to adapt and move forwards.
There is more to university than merely attending lectures, and those reasons will be very compelling when it comes to encouraging those students to return.
Will we see a shift in the way that university is delivered? Yes, but with hundreds of years successfully educating people from around the world, I argue that UK universities are attractive enough and resourceful enough to survive this change in climate.
We are reminded that in order to ensure survival, it is paramount that HMO property investors ensure they create and maintain standards of both property and service that rank in the top 5% of an area. Such desirable properties should avoid being as affected by what happens during the coming academic year.
Our advice? If you do what it takes to occupy this top 5%, you should never sell.