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Will the rise in fees affect the UK student property market?
LV Insurance and Jakuta Limited - the company which operates StudentTenant.com - have both recently carried out surveys which detail that the forthcoming rise in student fees could have a significant impact upon a student's decision to live in the private rental sector, resulting in a drop of up to 40% in some areas.
It has long been a tradition in the UK that students opt to move away from their home town and embark on university life in another part of the country. As well as being a rite of passage for many teenagers who seek to secure complete independence, this has also created a multi billion pound rental market in the UK and transformed many cities and towns into thriving student hubs, fuelling the local economy with student loan money.
In 2010 the government announced that university tuition fees were going to rise from approximately £3000 per annum to up to a maximum of £9000 per annum depending on the specific university. Whilst graduates would not be required to pay back their loans until they're earning over £21,000 per year, as opposed to the current threshold of £15,000 per year, it would mean that the minimum debt the majority of students would leave university with would be at least £27,000. A significant burden for those just starting out and with any aspiration of entering a first time buyer hostile housing market.
One potential way for students to slash the costs of higher education would be to forget the notion of moving to the other side of the country to go to university, put up with living with parents for a few more years and stay living at home - something which is extremely common in countries such as France and Spain. Rent, after all, is most students highest expenditure after fees and not having to worry about bills, food and landlords for a few more years may actually start to look like a very attractive prospect to financially conscious teenagers.
So should landlords start looking to offload their portfolios now whilst the going is still good? Are thriving university cities which attract thousands of students from other areas in the country going to become ghost towns and shadows of their former selves? Most landlords, universities and investors would agree that the answer to this is no.
Whilst it is undeniable that the rise in tuition fees may have an effect upon the UK student rental market, it is unlikely that the rise in fees will cause it to crash.
Both universities and purpose built student accommodation providers are continuing to expand and develop new residencies for students, demonstrating a faith in the market. Additionally, research is showing that whilst students coming from the UK may be affected by the rise in fees, the number of students coming from the EU or Non EU countries to study here is likely to increase.
There is no doubt that the rise in tuition fees is likely to alter the market place and whenever a market place changes there are always winners and losers, however, savvy and prepared landlords can use the change to their advantage by ensuring that they're targeting the right type of students at the right time.