The low-down on the 2023 student letting market
Rhys Owen, Senior Property Investment and Market Advisor, discusses some of the things we may come across as far as the 2023 student letting market is concerned...
Estimated reading time: 4 minutes
Now that 2023 is well underway, let's examine the important months for student landlords and what they need to be aware of in the face of surging demand and economic uncertainty.
After all, no matter happens within the property market, it’s always business as usual as far as university education and students are concerned!
The UK Student Let Market
The student let market in the UK has seen substantial growth in the past decade - and this is especially true in Cardiff - remaining robust despite challenges. The pandemic may have negatively impacted on various sectors in 2020 but the UK residential property market saw a boost as people sought more outdoor space and homes with separate in-house office areas for remote work.
Initially, the student let market was affected as universities closed and students switched to online classes. But since the UK has started to return to normal, there has been a surge in demand for student housing. Students are as eager as ever to secure their living arrangements for the start of upcoming terms.
Important months for student landlords to note
A brand-new academic year will kick-off in September but there is sure to be a high demand for student housing well in advance as students search for a place to live ahead of time. To secure the best tenants, student landlords should consider advertising properties much earlier in the year, such as springtime.
In the summer months, student landlords need to be prepared to handle administrative tasks like taking deposits and references – or hand that responsibility over to reputable local letting agents - as well as ensuring their properties meet health and safety regulations and have any necessary repairs completed.
Some councils may require a license to let out properties, even for non-HMO landlords, depending on the area. Ensure you are aware of and comply with regulations that may be applicable to you.
Read: Student lettings, but not as you know it. Video is vital.
Opportunities for Investment in the Growing Student-Let Market in 2023
With universities returning to full operations in 2022, many saw a surge of students seeking accommodation in popular student areas. A shortage of student housing and growing demand for higher education resulted in many students having to rent properties outside of the immediate area. The return of international students also added to the demand for student housing, making UK university cities like Cardiff a popular study destination.
Before the pandemic, student properties were a popular investment for landlords due to their reliable demand and higher rental yields compared to non-student rental properties. A study by Paragon Bank showed the top yielding university cities in 2022 were returning an average yield around the 8% mark. With the average non-student rental yield closer more like 4%, it's clear why student properties remain a solid investment choice.
Potential challenges in 2023 for student housing investments
While there are attractive investment prospects for student housing due to growing demand, high inflation, and rising interest rates could lower the actual returns for landlords, especially in areas with lower yields. With that said, in cities with strong student populations, the local economy's growth may counteract some of these factors.
For landlords, widespread inflation and rising interest rates can be significant pain points. These costs are evident in the entire student housing industry just as they are across all other markets, so this may lower the potential profits for landlords.
Additionally, the rise in interest rates has led to higher mortgage costs for many landlords, especially those with variable rate mortgages, which again can affect profits.
However, taking a long-term view is crucial in any investment, and the student housing market is likely to remain strong due to steady demand and the hope of a decrease in inflation and interest rates in the future.
Read: Check out our helpful landlord guide
Student Rental Prospects
The return to pre-pandemic norms has fuelled a surge in demand from both local and international students in the past year and a half, leading to a high competition for student rentals. This demand has made it a lucrative opportunity for student landlords as the student rental market continues to thrive.
It's crucial for landlords to stay informed of any new regulations in 2023, including required licenses, and to plan ahead for the peak rental months. Focusing on these key times will increase the chances of finding tenants and simplify maintenance and any administrative tasks.
In 2023, there may be obstacles such as inflation and rising interest rates, but the shortage of university-provided student housing is evidence that demand and rental prices may well continue to rise, making it a worthwhile investment for landlords in both the short and long term.
Here at CPS Homes, we have the knowledge and expertise required to help landlords in Cardiff attract students to their student lets. To learn more and give yourself a head start don’t hesitate to get in touch with our friendly lettings team by calling 02920 668585, e-mailing enquiries@cpshomes.co.uk or by popping into one of our three Cardiff based branches.
The information contained within this article was correct at the date of publishing and is not guaranteed to remain correct in the present day.
