Initial Market response
The main effect from Covid on the national HMO market with the first lockdown in March 2020 was most students terminated their contracts and moved back home. Demand for properties dropped away significantly and as a result void periods increased and there was some downward pressure on rents. Once lockdown ended and the market reopened at the end of June activity levels surged with a spike in demand for all types of property including HMOs as students returned to campuses.
But the picture changed quickly as uncertainty around what form teaching would take crept in as covid cases started to increase again and Government guidelines changed with new levels of restrictions. The result was a move to online learning which led to many students again terminating tenancies and moving away. That said this wasn’t as dramatic as what was experienced in March with some students deciding to remain in their flats rather than live at home.
In a recent survey of 2800 students carried out by the Office for Nationals Statistics (ONS) it was found that 85% were currently living at the same address as they were at the start of the academic year in September/October.
Of those, more than half (51%) were now living with parents, guardians or family members when they hadn’t been previously.
As we moved into early 2021 the market across Scotland reacted in different ways with significant regional variations. Universities continue to teach online and most students are still being advised not to travel to term time accommodation though Since the 15th March there have been some exceptions to this advice.
The current Coronavirus (COVID-19) timetable for easing restrictions states that from 17th May the Scottish Government hopes to introduce the following easing:
“colleges can return to a more blended model of learning”
This should allow domestic students to return to campus and perhaps a return to a limited style of on campus teaching. So, the universities all seem to be planning to increase in person learning over the coming months, but it is unlikely that a full return to lecture theatres is going to happen until the next academic year.
Purpose Built Student Accommodation
The Purpose Built Student Accommodation PBSA sector has also been affected by COVID with Unite Group reporting its occupancy rates have dropped by 65% during the pandemic but in a recent statement the companies chief executive, Richard Smith, struck an optimistic note saying he is optimistic that demand will return and he expects occupancy rates to return to between 95% and 98% in the 2021 – 2022 academic year.
It is worth pointing out that many students who choose PBSA style of accommodation are from overseas and the more traditional HMO style of property tends to attract the domestic market.
In Edinburgh rents for HMO flats have seen significant falls and demand for properties has reduced. At the time of writing we haven’t yet seen any significant uplift in demand and it will be interesting to see what happens as lockdown restrictions are further relaxed and there is more clarity around what form teaching will take in the next academic year. Will demand bounce back as we enter what is normally the busy time when students look to secure accommodation?
Glasgow and other locations
The market in Glasgow seems to have fared better than Edinburgh with demand levels proving resilient. Properties that are being advertised as available from June onwards are seeing large amounts of interest with multiple applications for properties and high levels of competition. Rents also seem to have remained stable with 4 bed flats actually seeing an increase of 5.5% in Q4 2020 (source Citylets)
In other locations such as Stirling and Dundee the market does appear to be operating though again demand isn’t what it would be at the same time pre COVID.
With the continued roll out of the vaccine and hopefully relaxation of restrictions we are optimistic that by the next academic year all Universities will have returned to on campus teaching. Our expectation is that demand levels will start to return certainly from domestic students. However, overseas travel is likely to remain difficult and thus the uptake of courses among foreign students is likely to remain constrained.
If you’re looking for an Edinburgh property management service to help you rent out and manage your property, do not hesitate to get in touch.