The student market is changing
It’s long been argued that too many students live in overdeveloped, cramped and amenity-lacking shared accommodation. It’s a view that was certainly shared by Cardiff Council when they designated Cathays an Additional Licensing Scheme area in 2010, and then Plasnewydd (Roath) in 2014. By making landlords obtain a licence, it allowed the local authority to regulate the number of occupants, room sizes and amenities, amongst other things. Whilst costly and admin-intensive, we believe the introduction of both schemes was right as it has forced change for the better, in terms of both safety and quality.
Since then, the market has moved on again, influenced by Cardiff Council once more. The introduction of their new Supplementary Planning Guidance (SPG) in 2016 stemmed the flow of former family homes being bought and converted to HMOs by investors. Their reasoning was that there was already a saturation of HMOs in certain areas of the city, which was putting huge strain on waste collection services and often policing. Parking was also identified as a problem (and still is!), what with the increased number of people living on streets and roads originally designed for far less. But above all, we suspect the guidance was most intended to prevent buy-to-let investors removing more properties from the owner-occupier market.
Belts are finally loosening
The result is that family homes (C3 planning classification) are now rarely being converted to 3-6 bed lets (C4) or 7+ bed lets (HMO sui generis) in areas of the city already dominated by HMOs. You’d think that might protect landlords who already own large student lets because it’s essentially now a closed shop to newcomers, but it’s coincided with a huge number of modern, secure Purpose-Built Student Accommodation (PBSA) rooms coming to the market, which is offering serious competition. Why share a tight house with 7 or 8 others when you can live in relative luxury with your own ensuite bathroom?
Previously-established 8, 9 and 10-bed lets are now frequently losing a bedroom due to lower demand from large groups. Landlords are using the extra room to create additional amenity space, such as dining rooms or 3rd/4th bathrooms.
Coming full circle from our opening statement, this is seeing properties’ proverbial belts loosen for the first time in a long time and, at last, both they and their occupants are being allowed to breathe.
Our advice
Even before coronavirus we were seeing properties that hadn’t been significantly improved in recent years struggling to let. This estimated 5% of properties have ‘clung on’ for so long, always relying on a group needing to move in, rather than wanting to. Now they’ve fallen empty, each of these landlords is faced with an expensive upgrade plan and no rental income whilst they do it.
Standards and expectations are rising year-on-year and we firmly believe our clients are leading the way under our guidance. Plan ahead, be receptive to the idea of improvements and don’t hesitate to ask us for our thoughts.
