Buy-to-let ‘armchair’ landlords with student accommodation could see a huge drop in demand when the next academic year starts, if universities continue with online-only teaching.
That is the warning from the Mistoria Group, high-yielding student buy-to-let investment specialists, which says the Covid-19 will have a huge fallout for investors.
Mistoria warns many students are likely to be studying at home or deferring their entry for another 12 months, causing a massive hit to rental incomes.
The move will be compounded a change to the law on tenancies and tougher health-and-safety rules, marking a tougher regulatory regime for landlords.
Scrapping Section 21 tenancies
Currently, landlords issue a fixed-term Section 21 tenancy and at the end of the period they are able to let the property to new students.
The scrapping of Section 21 means that landlords will need to turn to a Section 8 notice, used if a tenant falls into arrears. However these can be challenged much more easily than a Section 21, leading to fears they may not be able to regain possession of their properties quickly.
Mish Liyanage, managing director of Mistoria, said: “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.
“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.”