Impact of COVID-19 on Liverpool Student Rental Sector

[Khalia]

Hi. I don’t think Chinese or other foreign students will be returning to Liverpool in autumn in great numbers. This will lead to a shortfall in renters for university accommodation. Which in turn will mean the university will offer this accommodation to home students at slightly lower than normal rates. Which in turn will decrease students renting privately. Which in turn will result in private rented accommodation being cheaper/infilled due to lack of demand. This will be exacerbated by young service sector employees moving home to live with parents when the recession starts. 
 

Any thoughts on my reasoning. Note Liverpool has one of the highest Foreign Chinese student numbers.

I really hope my analysis is right. I need a cheaper rental to live in! 

[stuckmojo]

37 minutes ago, Khalia said:

Hi. I don’t think Chinese or other foreign students will be returning to Liverpool in autumn in great numbers. This will lead to a shortfall in renters for university accommodation. Which in turn will mean the university will offer this accommodation to home students at slightly lower than normal rates. Which in turn will decrease students renting privately. Which in turn will result in private rented accommodation being cheaper/infilled due to lack of demand. This will be exacerbated by young service sector employees moving home to live with parents when the recession starts. 
 

Any thoughts on my reasoning. Note Liverpool has one of the highest Foreign Chinese student numbers.

I really hope my analysis is right. I need a cheaper rental to live in! 

Interesting. I used to rent a flat in the city centre until the 27th of March - imagine the timing! - for work which I no longer need so I have a vantage point on this. Liverpool has a large proportion of Arab/GCC students who spend a lot on money on rentals. I expect much of this income to evaporate just as new builds are under construction. The market was already oversupplied a year ago. Now it will be carnage. 

[Khalia]

Liverpool University had 10,890 international students in 2017–18. Just over 3500 were from China.

"The university guarantees a place in university accommodation if an international undergraduate student accepts a conditional or unconditional offer as their firm choice, and applies by the accommodation deadline. The university is usually also able to offer accommodation to the majority of students who have an Insurance Offer or who come through Clearing." From Liverpool Uni website,

This autumn is going to be very interesting for the Liverpool housing rental market.

[flatnose]

Agreed, I have been working in Liverpool for the past seven years. Student accommodation new builds have been going up everywhere offering investors guaranteed returns. I am very interested to see how this plays out. 

 

[Burbujista]

11 hours ago, flatnose said:

Agreed, I have been working in Liverpool for the past seven years. Student accommodation new builds have been going up everywhere offering investors guaranteed returns. I am very interested to see how this plays out. 

 

I assume that the rent guarantee is as reliable as the health of the company providing that guarantee...

[MinistryMan]

What happened with the investigation in to fraud over flats and student accommodation in the city?

https://www.bbc.co.uk/news/uk-england-merseyside-51028296

[Confusion of VIs]

On 28/04/2020 at 22:25, flatnose said:

Agreed, I have been working in Liverpool for the past seven years. Student accommodation new builds have been going up everywhere offering investors guaranteed returns. I am very interested to see how this plays out. 

 

I wonder how secure those guarantees are.

[flatnose]

8 hours ago, MinistryMan said:

What happened with the investigation in to fraud over flats and student accommodation in the city?

 

No idea. However, I drive past the site pictured in the your article every week. Building appeared to be progressing as normal right up to the lockdown. Dunno what is happening now as I commute from The Lakes and am working from home. 

Edited May 1, 2020 by flatnose

[spyguy]

On 28/04/2020 at 22:25, flatnose said:

Agreed, I have been working in Liverpool for the past seven years. Student accommodation new builds have been going up everywhere offering investors guaranteed returns. I am very interested to see how this plays out. 

 

Its not just Liverpool.

Pick a UK town of > 20K and there will be a new Uni and student flats being built.

Its insane.

 

[Mikhail Liebenstein]

My wife who has links to the education sector also informs me that pretty much every UK University and College is now insolvent due to loss of income on foreign students and in some cases an inability/unwillingness to furlough staff. Essentially a lot were in a bad place to start with.

If I we’re a foreign student would I want to pay money over to an institution that might go bankrupt?

I’m sure Oxford, Cambridge, Imperial, UCL, Durham, Southampton and Bristol will be fine, as they have proper research and other assets and would always get bailed out if it came down to it.  It’s the bums on seats Universities that are going to struggle, especially those that are little more than getaways for the wayward/thick offspring of ambitious overseas social climbers.

Whilst they might be able to fill in for a bit this year via remote learning, that would ultimately be a one way journey to consolidation of the sector into a few brands if it becomes the norm. Remote learning is highly scalable, and if students have the choice of say a Russell Group institution or MIT, Harvard, Yale etc, I doubt that the former Polytechnics are going to do so well. We might even the see things like Google University popping up, certainly they have all the public texts and know how in subjects like machine learning.

Edited May 2, 2020 by Mikhail Liebenstein

[mspL4]

Being a resident of Liverpool all my life, and living in an area of the City which is synonymous with Student digs due to it's proximity to 2 of the 3 Universities in the City, I personally hope that this all comes crashing down around those Over-leveraged, Smug, Psychopathic BTL Brigadeeers.  Living on a street with less than 30 3 Bedroom Victorian Terraced Family houses, at least a quarter of which have been ripped out and carved up into anywhere between 4 and 7 bedroom rabbit hutches to squeeze in as many out of town Students as possible to maximise their profits, (and to take up all the Residential Parking in the process) I hope to see some massive voids coming to my street and others like it which will hopefully bring these idiots and their perceived, misguided "entrepreneurship" crashing back down to Earth, forcing them to rethink their "Business Model" and maybe try their hand at doing something productive which will add value to Society, rather than just being a Parasite who extracts monies from Students via Student Loans etc to pay their BTL Mortgages and removing any semblance of Community Spirit from the Residential areas they target for their own Personal Gains.  Hilarious that Universities are now begging for a handout too 'cos their Gravy Train has stopped moving for a bit.  Maybe they should stop building so many campuses and stop paying their Vice Chancellor's so much money?  Striking similarities between IO BTL Brigadeers and Universities...betting their present on future gains...idiots.  I hope they all burn and leave a blanket of ash on the ground...

[highcontrast]

7 hours ago, mspL4 said:

Being a resident of Liverpool all my life, and living in an area of the City which is synonymous with Student digs due to it's proximity to 2 of the 3 Universities in the City, I personally hope that this all comes crashing down around those Over-leveraged, Smug, Psychopathic BTL Brigadeeers.  Living on a street with less than 30 3 Bedroom Victorian Terraced Family houses, at least a quarter of which have been ripped out and carved up into anywhere between 4 and 7 bedroom rabbit hutches to squeeze in as many out of town Students as possible to maximise their profits, (and to take up all the Residential Parking in the process) I hope to see some massive voids coming to my street and others like it which will hopefully bring these idiots and their perceived, misguided "entrepreneurship" crashing back down to Earth, forcing them to rethink their "Business Model" and maybe try their hand at doing something productive which will add value to Society, rather than just being a Parasite who extracts monies from Students via Student Loans etc to pay their BTL Mortgages and removing any semblance of Community Spirit from the Residential areas they target for their own Personal Gains.  Hilarious that Universities are now begging for a handout too 'cos their Gravy Train has stopped moving for a bit.  Maybe they should stop building so many campuses and stop paying their Vice Chancellor's so much money?  Striking similarities between IO BTL Brigadeers and Universities...betting their present on future gains...idiots.  I hope they all burn and leave a blanket of ash on the ground...

Fantastic post...a brilliant summary, and yes great point about modern universities similarly being leeches in the same way BTL scum are by "betting their present on future gains"

The next few months/autum are going to be a joy to watch for watching BTL scum and univerisities burn.

[Tulip_mania]

Liverpool Uni is Russell Group and will still get its UK students, who will be most of those living in the Smithdown Road houses. A large part of this will already be signed up for next year. The new build city centre halls which rely more on international students will struggle more. Though this could mean that next year the purpose built blocks are in a price war with the run down terraces...

[mspL4]

36 minutes ago, Tulip_mania said:

Liverpool Uni is Russell Group and will still get its UK students, who will be most of those living in the Smithdown Road houses. A large part of this will already be signed up for next year. The new build city centre halls which rely more on international students will struggle more. Though this could mean that next year the purpose built blocks are in a price war with the run down terraces...

That sounds like fantastic news & could well be a "Grab the popcorn" moment next year if purpose built blocks are in a price war with  terraced houses. I have no issue with Students whatsoever, whether they be local or out of towners, (you can get good & bad, just as you can with renting families or Owner Occupiers) and in all honesty they should be staying in purpose built blocks. They can be noisy & behave like Students if they want to while living next door to other Students. I take exception to the decimation of local communities & the carving up of perfectly good family homes just so that some Moron can parade around in a PCP-fuelled 4x4 & think that they're some sort of genius Entrepeneur who's providing a Public Service to the local area rather than destroying it. I have not 1 iota of sympathy for any of them.

[Grayphil]

I living in Netherton right now, I'm a bit confused though, Liverpool is cheap as chips compared to the rest of the country. You can still buy a 2 bed terrace 3 miles from centre for 60000, with interest rates the way they are the mortgage is next to nothing... I can understand the idea, but surely, there are places more overpriced and more due for a crash than Liverpool. 

A quick zoopla search can show certain places ars still at 2001 levels, 

Basically I'm saying 220 a month for a 2 bed terrace 3 miles from the centre isnt overpriced

[mspL4]

31 minutes ago, Grayphil said:

I living in Netherton right now, I'm a bit confused though, Liverpool is cheap as chips compared to the rest of the country. You can still buy a 2 bed terrace 3 miles from centre for 60000, with interest rates the way they are the mortgage is next to nothing... I can understand the idea, but surely, there are places more overpriced and more due for a crash than Liverpool. 

A quick zoopla search can show certain places ars still at 2001 levels, 

Basically I'm saying 220 a month for a 2 bed terrace 3 miles from the centre isnt overpriced

This is true. But as Banks & BS would much rather lend to a Landlord than a potential Owner Occupier, (less risk) that £220 per month mortgage payment could bring in £300 per room per month, (let's not forget the "Fourth Bedroom", aka Living Room with a bed in it) as a Student Let. So you could rake in £1k per month profit. While at the same time taking up to 4 Residential parking spaces & denying a family a home.

Edited May 2, 2020 by mspL4

[Grayphil]

2 minutes ago, mspL4 said:

This is true. But as Banks & BS would much rather lend to a Landlord than a potential Owner Occupier, (less risk) that £220 per month mortgage payment could bring in £300 per room per month, (let's not forget the "Fourth Bedroom", aka Living Room with a bed in it) as a Student Let. So you could rake in £1k per month profit. While at the same time taking up to 4 Residential parking spaces & denying a family a home.

Of course I agree, I'm just saying I can't really see a reason for a crash in prices, when it's already so low

[shlomo]

14 minutes ago, Grayphil said:

Of course I agree, I'm just saying I can't really see a reason for a crash in prices, when it's already so low

I follow your reasoning, prices in This part of Liverpool might even go up.

[flatnose]

22 hours ago, mspL4 said:

Being a resident of Liverpool all my life, and living in an area of the City which is synonymous with Student digs due to it's proximity to 2 of the 3 Universities in the City, I personally hope that this all comes crashing down around those Over-leveraged, Smug, Psychopathic BTL Brigadeeers.  Living on a street with less than 30 3 Bedroom Victorian Terraced Family houses, at least a quarter of which have been ripped out and carved up into anywhere between 4 and 7 bedroom rabbit hutches to squeeze in as many out of town Students as possible to maximise their profits, (and to take up all the Residential Parking in the process) I hope to see some massive voids coming to my street and others like it which will hopefully bring these idiots and their perceived, misguided "entrepreneurship" crashing back down to Earth, forcing them to rethink their "Business Model" and maybe try their hand at doing something productive which will add value to Society, rather than just being a Parasite who extracts monies from Students via Student Loans etc to pay their BTL Mortgages and removing any semblance of Community Spirit from the Residential areas they target for their own Personal Gains.  Hilarious that Universities are now begging for a handout too 'cos their Gravy Train has stopped moving for a bit.  Maybe they should stop building so many campuses and stop paying their Vice Chancellor's so much money?  Striking similarities between IO BTL Brigadeers and Universities...betting their present on future gains...idiots.  I hope they all burn and leave a blanket of ash on the 

Well said

[Tulip_mania]

16 hours ago, Grayphil said:

I living in Netherton right now, I'm a bit confused though, Liverpool is cheap as chips compared to the rest of the country. You can still buy a 2 bed terrace 3 miles from centre for 60000, with interest rates the way they are the mortgage is next to nothing... I can understand the idea, but surely, there are places more overpriced and more due for a crash than Liverpool. 

A quick zoopla search can show certain places ars still at 2001 levels, 

Basically I'm saying 220 a month for a 2 bed terrace 3 miles from the centre isnt overpriced

But what is the average wage in the areas where houses are £60k? Do people in these areas have either a 10% deposit or any kind of credit rating to get a mortgage. It's not so much that I think these houses are overpriced, as it can't be far off actual construction cost. But there should be more social housing available at rents which someone on regular local wages can afford rather than more BTL Del Boys.

[spyguy]

5 minutes ago, Tulip_mania said:

But what is the average wage in the areas where houses are £60k? Do people in these areas have either a 10% deposit or any kind of credit rating to get a mortgage. It's not so much that I think these houses are overpriced, as it can't be far off actual construction cost. But there should be more social housing available at rents which someone on regular local wages can afford rather than more BTL Del Boys.

Incomes dont drop much below NMW.

The issue with Liverpool and a lot of other Northern towns is excess supply of houses over demand.

The markets have seen something v di pilar with Oil being sold for -45/barrel, caused by crude piling up with no demand to clear refineries and nowhere to store it.

What price do you put on an empty house where you are liable for 1.5 x ctax?

This phenomena will soon be in large areas of the South where towns have lost their major employer I.e FinSec, levy low earning under 40s and home owning 65+.

 

[shlomo]

15 minutes ago, spyguy said:

Incomes dont drop much below NMW.

The issue with Liverpool and a lot of other Northern towns is excess supply of houses over demand.

The markets have seen something v di pilar with Oil being sold for -45/barrel, caused by crude piling up with no demand to clear refineries and nowhere to store it.

What price do you put on an empty house where you are liable for 1.5 x ctax?

This phenomena will soon be in large areas of the South where towns have lost their major employer I.e FinSec, levy low earning under 40s and home owning 65+.

 

House prices in London will fall, if they are so low to start will in Liverpool and with so much government printing prices will go up

 

[spyguy]

6 minutes ago, shlomo said:

House prices in London will fall, if they are so low to start will in Liverpool and with so much government printing prices will go up

 

London house prices I'll never fall!

Or so I'm constantly told.

Despite dipping below 3x average earnings in 1995.

It's different now, of course... it's much worse - 30% of London housing us now private rentals, 90% of London residential mortgages since 2000 are IO, 50% of London population is foreign born, limited employment outside of finsec, which is still shrinking.

I dont think you in much risk of buying in the North, as long as it's less than 5x local income or 3x your income.

I think buying in London is a one way trip to bankruptcy.

 

[shlomo]

7 minutes ago, spyguy said:

London house prices I'll never fall!

Or so I'm constantly told.

Despite dipping below 3x average earnings in 1995.

It's different now, of course... it's much worse - 30% of London housing us now private rentals, 90% of London residential mortgages since 2000 are IO, 50% of London population is foreign born, limited employment outside of finsec, which is still shrinking.

I dont think you in much risk of buying in the North, as long as it's less than 5x local income or 3x your income.

I think buying in London is a one way trip to bankruptcy.

 

Do you not think some of the maxims you have acknowledge as truths in the fullness of time are no longer relevant.

A house is also a base, where you come back like a womb, so looking at 3.5 or 5 times earnings might not be so relevant 

[Tulip_mania]

9 hours ago, spyguy said:

Incomes dont drop much below NMW.

The issue with Liverpool and a lot of other Northern towns is excess supply of houses over demand.

The markets have seen something v di pilar with Oil being sold for -45/barrel, caused by crude piling up with no demand to clear refineries and nowhere to store it.

What price do you put on an empty house where you are liable for 1.5 x ctax?

This phenomena will soon be in large areas of the South where towns have lost their major employer I.e FinSec, levy low earning under 40s and home owning 65+.

 

Yes, but very few people wish to live in the parts of Liverpool where houses cost £60k, I don't think there is a shortage of houses in the North of England, but there is a lot of loose credit, Help to Buy etc being spent in the more desirable parts. There are suburbs of Leeds, Sheffield, Manchester and Liverpool where prices make very little sense in comparison to local wages. It is however not London where a total dump in zone 3/4 costs £250k.