Article Four is now in effect and landlords need special planning permission to convert a single family home into a rental property of three or more unrelated tenants. While it is up to each local council as to whether they adopt the Direction, investors considering student property in affected areas will need to be aware of the impact of the law, the Global Property Guide advised. Currently, Nottingham, Leicester and Newcastle are the main university cities to sign up to Article Four, in a bid to protect single family homes.
While there is a noted lack of student accommodation across the UK, family homes are also coming under threat as landlords seek to take advantage of the opportunities universities offer. By converting family homes into student housing, investors are able to enjoy far higher returns than would be possible through a traditional residential let.
However, Article Four will make it more complicated for landlords to enter student market in this way and could lead to an even greater scarcity in housing - at least for the immediate future. True, it will create greater demand for purpose-built student accommodation, but in the near-term student cities that have opted in to the Direction could find themselves in difficulty.
The number of students flocking to Nottingham, Leicester and Newcastle will only continue to rise. According to UCAS figures, the number of acceptances for Nottingham Trent and the University of Nottingham alone total around 60,833. This figure is continuing to grow each year. Shad Ali, a consultant for East Midlands Property Owners, said "Nottingham University has a strong reputation for Medical and Law students which traditionally often come from more affluent backgrounds and the increase in tuition fees will not deter them".
However, Nottingham council's planning policy now allows the conversion of centrally located commercial properties, creating new opportunities for landlords and preserving family homes. While the modern and often luxurious style of these properties are attractive to students, many still prefer living in homes converted for accommodation, as these are traditionally located close to other students.
- Tuesday 04 June 2013