The founders of one of Birmingham’s biggest student accommodation providers tell LandlordZONE about the challenges they face from corporate build to rent investors
With the UK’s purpose-built student accommodation (PBSA) sector worth £53bn – and demand from students still outweighing the 25,000 new beds delivered into the market each year by 3:1 – major corporate investors are spotting the opportunities in Build to Rent schemes for students.
But the competitive student accommodation sphere is no longer a playground for “part-time” landlords, according to one of Birmingham’s biggest student accommodation providers, Unipad, who operate more than 500 beds – a mixture of HMOs in converted properties, and apartments in new purpose-built blocks – focused around the city’s Selly Oak area.
“The party’s over for the part-time landlord. They have benefitted from extraordinary capital growth in recent years, but there’s now a headwind against landlords who have a job and are just renting out student properties for extra income,” says Unipad’s founder Leigh Gainsley.
“The Government only wants professional landlords now. The compliance, the tax and the competition from corporates means old-style landlords will get taken out of the market as they won’t be compliant and the quality won’t be good enough,” he adds.
Competition from other operators, whether private landlords or build to rent developers, presents Unipad’s biggest challenge, says the company’s co-founder, Andrew Green. Purpose-built schemes are upping the stakes in particular by offering hotel-style facilities such as concierges and gyms.
“That competition is a good thing as it means you have to improve standards, but you have to be all over it. You have to offer the right product and be price sensitive,” says Green.
“Not everyone wants the commercial feel of purpose-built studios or to pay £200 a week. Many students prefer a room in a shared house with a real uni feel for £100 or so a week,” he adds.
Gainsley also emphasises the value of having local knowledge as a landlord. “Lots of corporates get involved in the market and don’t understand it,” he adds. “We have lived and breathed the Birmingham student market for 20 years, since we were students here. The biggest thing with students is location. We are in the locations they want, but a lot of investors who sit at a desk in London haven’t a clue and they develop a scheme that’s simply not in the right place.”