As property investors ourselves the team here at North Fox are, like most people in the industry, concerned about the potential ramifications of the Rental Reform Bill proposed by the government. This legislation will have significant implications for the Buy to Let Market, further squeezing landlords who are already facing various obstacles to finding profitable investments.
One specific area that will be heavily affected by the rental reform bill is the UK Student Sector, particularly Houses of Multiple Occupancy (HMOs) commonly used by students. Currently, students can sign fixed contracts, allowing landlords to ensure the property is vacated each year to accommodate new students. However, the rental reform bill threatens to disrupt this arrangement. Under the bill tenancies will become open ended. Landlords will not be able to ensure tenants vacate the property at the end of the academic year.
The Purpose Built Student Accommodation (PBSA) market, on the other hand, has been announced as exempt from the proposed changes. PBSA properties are specifically constructed to house students, and the government will not alter the standard 51-week terms that students typically sign up for. This exemption provides a unique advantage to the PBSA sector.
PBSA properties offer guaranteed availability for the start of the academic year, making them highly desirable. With the rental reform bill potentially driving up demand even further, PBSA providers may increase accommodation prices, ultimately raising the resale value of these properties. Consequently, owners within the PBSA sector stand to actually benefit greatly from the rental reform bill.
Considering the current tax breaks on PBSA, the huge shortfall in student accommodation, rental reform bill exemptions, the high levels of net return and the fact these investments are totally hands-off, investing in the PBSA market is a fantastic opportunity. If you would like to find out a bit more about the various options North Fox have within the sector please get in contact today.
