Adrian Moloney

In the midst of every crisis lies great opportunity

The story goes that when Albert Einstein was questioned about a particularly challenging problem, he simply replied, “In the midst of every crisis lies great opportunity”.

There’s no doubt that we’ve all faced an unprecedented crisis in 2020, and the housing market, like everything else, has been affected. Now, I’m paraphrasing Albert’s famous quote slightly here, but I firmly believe that when the market is challenging, as it is at the moment, it often means there are more opportunities. 

Take landlords who provide student accommodation, for example. A few months back it was feared that Covid-19 could dramatically reduce the number of students studying for a degree, which could in turn have a knock-on effect on landlords who provide them with somewhere to live.

However, figures from UCAS, the organisation which processes university applications, show that the number of students applying for places has risen to an all-time high during 2020/2021. According to UCAS, over 40% of all 18-year-olds in the UK have requested a placement — the first time that more than four out of 10 students have applied to go to university. 

And it’s not just the number of students that is up; all these extra students need somewhere to live while they study, which may explain why online student property portal AccommodationForStudents saw a 25% rise in searches from prospective student tenants in June, compared with the same month in 2019.

This is great news for landlords who focus on or are thinking about investing in student accommodation. In a challenging market, HMOs are an attractive option for experienced landlords looking to maximise value from their portfolio, as they are always on the hunt for greater yields — complex residential accommodation, such as student HMOs, can offer this. 

According to recent research, landlords letting HMOs continue to generate significantly higher average rental yields — 6.9% compared to an overall average rental yield of 5.8% — and 18% of landlords who said that they intend to purchase a new property in the next 12 months say they would consider buying an HMO.   And as HMOs attract multiple tenancies, gross rental income tends to outstrip single lets, meaning that the rental yield is more secure if one tenant leaves a void.

At InterBay Commercial, we allow large HMOs of up to 20 bedrooms at up to 70% LTV and we process large portfolios under one account number, which means new applications only have to be keyed once. 

As the saying goes, ‘When one door closes, another one opens’; it’s important that lenders have the products and criteria in place to help experienced landlords make the most of the new opportunities that will open up in the wake of the crisis.

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