New research from student buy-to-let investment specialists, the Mistoria Group, has revealed that a combination of government legislation and the impact of Covid-19 are creating huge challenges within the student buy-to-let market.
According to the findings, BTL landlords specialising in student lets could see a huge drop in demand for accommodation when the next academic year starts, if universities continue with online-only teaching, which may lead to students studying at home, or deferring their entry for another 12 months.
Furthermore, the planned scrapping of Section 21 poses another threat to student landlords, many of whom believe it will make it harder to let to students. Currently, landlords issue a fixed-term tenancy for a fixed period and at the end of the tenancy, they are able to let the property to new students.
The scrapping of Section 21 will mean that student landlords will need to turn to a Section 8 notice, which can be used if a tenant falls into arrears; has been involved in criminal or anti-social behaviour; or broken the terms of their tenancy agreement. However, Section 8 notices can be challenged much more easily than Section 21, which is leading to fears that landlords may not be able to regain possession of their properties quickly.
Mish Liyanage, Managing Director of The Mistoria Group comments: “Student landlords are facing a very tough few months and this is driving some of the smaller players to cut their losses and sell up. It is no surprise that many landlords providing student accommodation are deeply concerned with the viability of the market. Historically, they have enjoyed excellent yields and great occupancy, but now they are facing unprecedented times.
“The last thing they need is more legislation that will make it harder to let to students. This is where companies such as Mistoria can help landlords to diversify into other rental and tenant segments, such as young professionals and social housing, which will enable properties to be fully let.
“Also, with the increased legislation and health and safety requirements, Mistoria ensures investor’s properties are fully compliant. Established student HMO property investors will be able to overcome these challenges and grow their portfolio further, while small-time, or accidental landlords may be driven out of the market.”