“We can’t yet say what’s on offer in September, UK universities tell freshers”
If you UK universities still can’t say what they’re going to do for 2020/21, it’s unreasonable to expect our potential tenants to make solid commitments.
For the moment, while we continue to receive enquiries, we are finding students cannot be certain about the dates they’ll need accommodation, and are reluctant to commit.
Fair enough. These are very difficult times for most, of course, but particularly sectors at all connected with education, and in particular, tertiary education. We feel the best thing we can do is be accommodating and patient.
One thing’s for sure, almost everyone is having it tough but, generally, we are all ‘pulling together’ to navigate these difficult times. So is it reasonable for students to be demanding rent reductions and cancellation of contracts? I read this article last week and thought it was worth a short comment.
Landlords are often vilified in the media but I know personally of many very good landlords who, despite zero grants or compensation from government schemes, are making arrangements with tenants who have lost work or been furloughed. Commercial landlords of shops, restaurants and leisure facilities are undoubtedly in for a very tough ride for an extended period. However, in the short term at least, they are able to claim grants linked to Business Rates.
The case for students in HMOs is slightly different. Whereas commercial landlords pay business rates, student accommodation is residential and is liable for council tax. There is no government support at all for providers except the CBILS loan scheme. CBILS is a loan, to be repaid, and subject to arbitrary interest rates after 12 months. Besides, only 1% of applications have been granted to date!
But many students have loans too. Which also must be repaid. Some have also had to work to support themselves and supplement those loans; that work has just gone and they can’t claim UC because they’re full time students. So I can see their point.
However, landlords are not the enemy here. Some of our residents have chosen to go home, some have stayed. We have helped some who’ve left by providing free boxes and tape, and offering free storage, but some have literally just bolted, leaving most of their belongings in their rooms.
Some who have left have paid periods in advance, some have payments due and are asking about the possibility of cancelling their contracts.
We are looking after those who have stayed, keeping in regular contact with each and every one. Cleaning and hygiene management continues, with the full support of the residents. We have installed neat hand sanitisers in the entrances of all flats, so residents, and any required visitors (i.e. for maintenance), can sanitise easily before touching handrails, door handles, etc when coming in from outside. This has been appreciated and helps create goodwill.
In order to keep providing services and protection to our remaining residents we need to keep paying our bills and for the people who manage everything. Some bills may reduce slightly but many won’t – high speed broadband doesn’t get cheaper when only one person is using it. Power and heating is used by fewer people but used much longer, all day and much of the night in fact.
So it is clear this is not a one dimensional situation to be solved with simplistic answers. On all sides, landlords, tenants, councils and regulatory bodies, there needs to be flexibility to find solutions for every case and this won’t be achieved by any single party ignoring the position of another.
As long as all parties act with integrity in cooperative spirit, we can all get through these exceptional, tough times.
It has been a long and difficult journey, to say the least! But yesterday afternoon we finally got the commercial refinance in place for the Huddersfield Zetland House project.
We now have a fantastic group of properties in a ‘cluster style’ student format providing 35 bedrooms, 8 kitchens and 14 bath/shower rooms.
We are immensely proud and feel we can allow ourselves at least a small celebration!
Of course, the work is never over – we need to maintain our standards and improve working practices, becoming a more profitable long term investment.
But finally, 22½ months after starting development work, 25 months after drawing up the initial evaluation documentation, we complete our ‘exit’.
I’m not kidding when I say this is a project I could write a small (no – maybe large) book about, involving;
before we even started, a problem with an area of ‘no-man’s land’ not on any title deed
subsequent declining of purchase finance and the deal apparently collapsing a number of times
eventually negotiating a vendor assisted purchase …
… utilising an exchange and delayed completion strategy
requiring an application to be made by the vendor for possessory title of the ‘no-man’s land’ with severe penalties for non-compliance
raising an initial £400k of development investment
completely stripping out, knocking about, reconstructing and refurbishing c.5000 sq ft of original hovel HMOs
in parts, finding the buildings in worse condition than anticipated (and we’d already thought it was really bad)
so bad in one part we had to remove the entire 40 sq m+ floor and start again
adding substantial dormers creating 4 bedrooms, 2 bathrooms and a kitchen in unexploited roof space
negotiating early end of lease to enable commercial conversion of a takeaway and a retail unit
digging down and excavating to create 5 new rooms, 2 bathrooms and a kitchen from the old beer cellars
Flood Risk Zone 3 complications
Planning problems and Planning Consultant issues
the collapse of the principle Project Director with a major heart rupture on site half way through development
navigation through the subsequent chaos
overshoot on delayed completion leading to …
… seeking emergency 12 month bridging, eventually from a private equity fund
further raising of finance to meet additional development and some overspend related to delays
(somehow) managing to hold to onto everything and meeting our target of 35 letting rooms for the student market
then there’s the whole refinancing process including dealing with low valuations and having to amend company structures to satisfy lenders
and (as they say) much, much more!
We have continually learned so much, about so many different aspects of property development, JV relationships and raising finance. It has indeed been a rollercoaster ride but the value to our collective education has been invaluable.
So, after jumping from the previous simple Buy-Refurb-Sell project to one involving all of the above on on our very next project – what next!?
Renowned property experts Allsop say they are witnessing the exploitation of a gap in the student accommodation market for HMOs – the ‘secondary’ Private Rented Sector market, away from the institutional brands such as iQ and DIGS. Larger scale investors are looking specifically at developing and acquiring HMOs with close proximity, great facilities and, most importantly (what is nigh impossible at redbrick Universities) great yields.
Makes me think North of England. Think Huddersfield? 😉