The Legal Side of Things
Student accommodation has become a concern during lockdown in the UK. Many students are worried about whether their tenancies will be extended if need be, and some students due to start in September this year may worry about being held to tenancies they will not be able to fulfil.
Official advice was that all students were to go home where possible – which puts landlords in a strange position, as accommodation agreements/housing contracts are still legally binding and students are liable to pay their rent until the end of their fixed-term tenancies.
Ending Tenancies early
It is the landlord’s decision whether they will agree to end agreements early or negotiate with student tenants around rent repayments.
This could potentially leave a property unoccupied for longer than landlord insurance will cover.
Usually, insurers will provide unoccupancy cover for up to 90 days during void periods when a property is empty, such as when student properties are usually empty over the summer period.
Check your unoccupancy cover policy
This cover usually covers severe property damage from extreme circumstances – fire, lightning, explosions, earthquakes, smoke and aircraft crashes – and has other restrictions in place. It is vital that landlords check their policy to see to what extent their property is covered, and for how long.
Some insurers are issuing void extension periods for policies that currently only cover landlords for up to 60 days, but this is happening on a case by case basis.
Inspections are especially important for empty properties, and can still be carried out safely during this crisis.
Weekly Inspections
When a property is left unoccupied for more than 30 days you must notify your insurer and perform weekly inspections of both the inside and outside of the property, maintaining clear written records and resolving any defects revealed.
Between 1 November and 31 March landlords must:
1. Ensure that the water supply is switched off at the mains and the entire water and central heating systems are drained of all water
2. Or continuously maintain the heating at a minimum of 10°C throughout the entire property
3. Keep the loft hatch door open to allow air to circulate.
Student Considerations
Although every case is different, many students should still be able to afford their rental payments as they will be living at home (most likely rent-free). Student loan payments are also generally distributed in April and September, so this is something they should have budgeted for already.
This will not be true in all cases, though, with many more students who rely on part-time work to pay their rent now unable to work due to the pandemic. Of course, even though many part-time staff members are covered by the Government’s furlough scheme, it doesn’t apply to those who might have just started a new job, which is common amongst students, where moving from job to job is often necessary.
These are all factors to take into consideration when planning your strategy, so it is important to approach every student as an individual – on a case by case basis.
As with all tenants, communication, consideration, and transparency are always key.
In terms of communication, it’s important that you have an open dialogue with your tenants and know whether or not they will be moving home to isolate and whether or not they plan on returning before the end of the year.
It’s also important to consider what landlords should be doing about any possessions left behind.
What is being forecasted for universities?
Guarantor Schemes
Rent strikes and students simply walking away from tenancies have left some establishments’ guarantor schemes hugely exposed, and many Universities are now withdrawing them.
When renting privately, most contracts require a guarantor for each tenant. For some, this will be a parent or relative, but the catch for many is that the guarantor must be UK based – many universities are happy to act as the guarantor, through their guarantor scheme.
However, this change leaves EU and international students without many options for a guarantor and could have a knock-on effect on international students being able to secure accommodation for the new academic year.
Phased Returns
Universities are also drawing up contingency plans for a phased return to face-to-face teaching with STEM students being prioritised and arts and humanities students not returning until January – but with no adjustment to the academic year. This is just a contingency plan at the moment but if it does happen, then this is likely to cause a substantial number of prospective students to defer their studies for a year if they are unable to access the full social and cultural university package (as a recent small scale survey suggests one in five might defer).
Student Accommodation
As and when universities do return to face to face teaching, it is likely that all universities, managers and operators of student accommodation will have to consider and implement a range of measures and restrictions to account for all required social distancing measures. While that may have a bigger impact on the operation of traditional halls of residence, it could also have an effect on the volume of rooms and beds that private operators and managers can let to students while social distancing measures are in place.
Summary
For the student accommodation sector, all of the above points will impact demand for their rooms for the upcoming academic year 20/21 and there may be a longer term impact on demand if overseas student numbers do not pick up – online degrees at substantially reduced fees are already being mooted. The sector may contract, but the operators with the better offering, better reputation, more innovative service delivery and (crucially) the better locations will thrive.
The good news for all our own Student Landlords is that throughout Covid 19 we have been working hard to secure interest and tenancies across the entire portfolio and have now let every available form of accommodation we have in our portfolio, and this, despite the challenges of the last few months, is even ahead of all previous years records. This is in no small part due to the efforts of the team and also our ability to remain open throughout the crisis – (albeit through a combination of remote access and sole workers in the branches) but the result is that we have been able to capitalise on the closures of some of our competitors in the Nottingham and those tenants who are keen to secure their places for the coming year.
