Could Buy to Let Investors Rescue Plymouth’s Empty Student Homes?
There’s a growing housing issue in several major UK cities, which contrary to the usual trend concerns supply outstripping demand. Regions with sizeable student populations are typically goldmines. For around 75% of the year, tens of thousands of properties are needed to accommodate learners. All of which adds up to a guaranteed income for building owners and landlords…in normal circumstances.
Unfortunately, things appear to have taken a turn for the worse in Plymouth. This autumn, it’s estimated that up to 2,000 student bedrooms across the city could be vacant. All at a time when demand for quality student properties should be outstripping supply by a significant margin.
According to a local student letting expert, far too many flats have been built across the city at a time when student numbers are actually in a state of decline. The result of which is a crisis in the making, wherein any number of major developments risk standing vacant during peak student season.
A particularly severe issue for the city of Plymouth, which relies heavily on a sizeable year-round economic contribution from its student population.
“I’m seriously concerned,” said Henry Hutchins, chief executive of Clever Student Lets.
“I can see between 1,500 and 2,000 empty units in Plymouth.”
He also reported dealing with at least one landlord who now faces going out of business, which has been unheard of for student property owners over recent years.
The speed at which new student properties have been built across Plymouth has resulted in far more vacant inventory than the city needs. Over the past year alone, an additional 5,243 student bed spaces have appeared across Plymouth. Many of which accommodate imposing skyscrapers and former commercial properties.
Far from accommodating a swelling student population, all this is happening at a time when student numbers in Plymouth are on the decline. According to official figures from the University of Plymouth, the city’s approximate student population has plummeted from 32,000 in 2010/11 to 21,000 in 2017/18.
Experts have also commented on the declining numbers of international students choosing to study in Plymouth.
Mr Hutchins highlighted the economic impact of approximately 11,000 fewer students living and studying in the city.
“Students are spending £300 million a year in Plymouth so if you take out 30 per cent fewer students that’s about £90 million less being spent in the city centre,” he said.
“I’m worried about that spend and the effect it will have on retail and employment.”
“The whole market is under pressure. I’ve been stating this for two years and no one has taken notice and now it is going to have a real effect in Plymouth.”
He and other experts are predicting a slow but gradual increase in student numbers over the years to come, but can also see a number of student flats and buildings being repurposed into conventional apartments.
“They might have to re-jig the market,” he said.
It’s therefore possible that the issue could play directly into the hands of the savvy buy-to-let investor. On one hand, it’s often true to say that purpose-built student apartments aren’t of the same quality standard as more conventional city-centre flats. They also tend to be smaller in size and of a somewhat nonstandard configuration. All of which could add up to significant re-development costs for investors.
At the same time, however, desperation and urgency on the part of vacant property owners could lead to significant price reductions. The money saved on the initial purpose of the property could therefore be used for renovations and/or repurposing, before letting it out at a profit.
There’s also talk of some vacant student inventory being acquired by social housing groups, though none have passed comment on the issue so far.