Leeds Student letting is high reward but high risk.

The council imposed their Article 4 direction in February 2012 meaning that no more houses in the majority of the city can be converted into Houses of Multiple Occupation without gaining planning permission first. 

This however, is not the issue. There is in fact an oversupply of student accommodation in Leeds, but of very varying quality with most students now preferring to pay a little more to live in modern refurbished houses and apartments rather than an old fashioned student house with wood chipped walls, draughty single glazed windows and avocado bathroom suites.

Today’s students have a higher expectation of quality in their accommodation.  Having probably spent their first year in one of the new wave of custom built, modern, en-suite student halls, they expect their second and third year properties to be of a similar standard.

Nowadays, wall mounted TV’s not only in the living room but in each bedroom are becoming more and more common.  Brush chrome fittings, dimmable LED lighting, leather sofas and USB plug sockets are becoming the norm.

Students will not pay £85 per person per week for a draughty old house, with mix and ‘not match’ second hand furniture that has come from a clearance sale, threadbare carpets and the famous wood chip wall paper.

Come the summer, there will be student properties that don’t let. This is where the issue of Article 4 will kick in and potentially hurt the student landlord population. Landlords with an existing student property will be very reluctant to rent to a family for a year if it means they lose their HMO status.

By putting a family in an existing HMO property, Article 4 rules mean you have changed the ‘use’ from a shared house (HMO) to a private dwelling. You would therefore need to apply to the Planning Department for planning permission if you wanted to put students in it for the next academic year. There is no guarantee you will get that planning permission, in fact it is likely you won’t.

One option is to drastically reduce your asking rent to the £70’s, even £60’s per week, making your Leeds student let the bargain of the week for cost-conscious students. You could consider throwing in some extras, like free Sky TV package, free wi-fi or even a cleaner?

However, you will always be chasing your rent downwards over the coming years, as each year your property finds it harder and harder to attract good tenants, and each year you end up with tenants who look after the property that little bit less.  In other words as your property reduces in quality, so will your tenants.

If however you are in the student rental game for the long term, then a better option would be to refurbish the property whilst it’s empty over summer.  You don’t have to go mad with the TV’s and all the other electronic wizardry we mentioned earlier (although to get top rent and to never have to worry about voids for the next 10 years, we would suggest you do).  Just get rid of the wood chip and have it re-skimmed and re-decorated throughout, fit new carpets or a new kitchen or bathroom.  Dress it properly like a show home and take some fabulous internal pictures which will help you market it for years to come.  

Then re-advertise late August or early September to overseas students or post grads, or to those under graduates who have left it late to get the best deals. It should go, and at a reasonable rent and just as importantly it’ll be looking great in November for when viewings start again for the next academic year.
 
Every landlord and every property is different, but if you are a Leeds landlord with student property, there are many options for you to consider. If you have an empty property and would like some advice on what could be done to make it more attractive to potential tenants then we're than happy to help. If you want a chat about your options, please give us a call.

5 bed with great potential on Hessle Place in Hyde Park

 

http://www.rightmove.co.uk/property-for-sale/property-51501332.html

This five bed on Hessle Place has just came on the market last month.  The location is fantastic - just opposite the Hyde Park Picture House, so to be honest should be achieving more than the £17,500 per annum (or around £67 per person per week) that it's currently getting.

The house is on at £225,000, which for the yield is expensive, but I think there's potential to increase it significantly.

We used to manage a 7 bed a few doors along, which even though it wasn’t the best layout ever, it still used to let every year quite early.  We let it for £79pppw (£28,756 per annum) for the academic year 12/13, and the landlord sold it shortly afterwards in the March of 2012 (once let) for £285,000. 

This one has a bedroom at the front of the ground floor, and the living room at the rear with the kitchen downstairs in the basement. There are two bedrooms and a bathroom on the first floor and two bedrooms on the second floor.  It’s not a bad house at the moment, but needs some updating (woodchip on the walls, only one bathroom etc).  

There should be scope to make it the same as the 7 bed I mentioned, although I’d change the layout slightly and put two bedrooms in the basement and living room and kitchen on the ground floor, or you could just modernise and add a second bathroom on the top floor (Jack and Jill), or make it a 6 bed.  

There's plenty of options, so I think it’s a case of working out whichever maximises your return and go with that.  Certainly, I'd have thought it would convert to a high quality 7 bed for less than £60,000, so even if you paid full asking price and did the work, you'd still be getting 10% return.

13 bed student property on Regent Terrace, Hyde Park

http://www.rightmove.co.uk/property-for-sale/property-51501326.html

This is being advertised as a 13 bed on Rightmove, but it’s actually four flats – two four beds, a three bed and a two bed.  It’s being marketed at £495,000 which is serious money, so one for the professional landlords out there.

The rent role is currently:

23 – 2 bed @ £75pppw - £7,800 per annum

23A – 3 bed @ £80pppw – £12,480 per annum

25 – 4 bed @ £650pcm - £7,800 per annum

25A – 4 bed @ 67pppw – £13,936 per annum

Total £42,016 per annum.

One of the four beds is currently let to a family at £650pcm which does bring the rent down – were it let to students at the same rate as 25A which with some work it should do, then the total rent would be £48,152.  

I think it's possible to rent the property out at £75 per room which would give an annual rent of £50,700.  To achieve that you would need to spend a bit of money updating the property – nothing major, as the layout of all four flats is OK, but they could all do with new carpets and redecorating, and the 4 bed at 25 could do with a new kitchen and bathroom (probably hence why it has struggled to let and ended up renting to a family).  Or you could go really high end with LED lighting, TV's in the bedrooms, new bathrooms and kitchens in which case you could be looking at rents in the late £70’s/early £80’s – so anything from £53,000 to £60,000.

Fantastic potential in Headingley

http://www.rightmove.co.uk/property-for-sale/property-47181526.html

I've not had chance to look at this one on Ash Road in Headingley, but I've seen and developed others very similar to it, so I know what can be achieved.

For those of you who know Headingley, Ash Road is a long road, so ideally you want to be at the top end near the Headingley Taps.  This is down the other end, but houses still let, and if in good condition for a reasonable rent.

This is currently split over two flats - a 3 bed dowstaris and a 4 bed upstairs.  I would be tempted to make upstairs a 3 bed as well which will make it a bit more spacious.  You've then got the option to let it to a group of 6 or just let each flat as a 3 bed.

In the downstairs flat, I'd turn open up the bedroom next to the kitchen and make it into a kitchen living room - fine for 3 tenants.  I'd take out the utility room and make the basement bedroom bigger, and then have the other two bedrooms on the ground floor.

In the upstairs flat, I'd do the same with the kitchen and living room and make them open plan.  I'd get rid of the bathroom on the same floor and make that bedroom bigger and then rejig the top floor to make the bathroom bigger and get rid of one of the bedrooms so you'd be left with a decent size bathroom and two good sized bedrooms.

Do all that to a high spec and you'd be looking at around £80pppw for both flats or just under £25,000 per annum.  If you can get the property for around £200,000 and spend £25,000 on it then you're looking at 11% return.  Pay £210,000 and spend £40,000 and you're still looking at 10% yield.  Now don't all bid at once!!

Ready to go 8 bed in Headingley with just under 10% yield

http://www.rightmove.co.uk/property-for-sale/property-48093829.html

This 8 bed on Estcourt Avenue is just about ready to go - not many improvements needed if any.  It's right at the bottom of Estcourt Avenue near Kirkstall Lane so nearly opposite the cricket ground.  

There's a load of communal space in the basement - great modern dining kitchen, cosy living room and it even has it's own dining room.  And the fact that all the communal space is in the basement means that none of the bedrooms are, which for an 8 bed is pretty unusual and should help it stand out.  

According to the details its rented out at £75pppw, but having seen it I think it should be achieving more - £79pppw minimum, which equates to just under £33,000 per annum.  Depending on what it goes for, that's a minimum return of 9.5% with potential to be a little more.

4 bed in the centre of Hyde Park with good potential yield

http://www.rightmove.co.uk/property-for-sale/property-47629141.html

This great little 4 bed came on the market just before Christmas.  It's on School View, just between the Norwoods and the Weltons, and just a couple of minutes walk from the Sainsburys on Brudenell Road, so in a fantstic location.

It needs some work - a new kitchen and main bathroom, carpets and re-decorating, and I'd be tempted to put a Jack and Jill bathroom on the top floor as well between the two attic bedrooms, so you'll be looking around £15,000 for a basic re-furb.  But if you could get it for under asking and do the work then it'll let all day long at a minimum £79pppw, so you'd be looking at around 10% return.