Economic downturn means better ‘value for money’

Freshers may well get “more value for money” when they look next term for housing, as letting agents across Coventry and Leamington Spa are squeezed by falling property prices.

Mark Lucas, manager of the letting agent, Archer Basset and Company, said more houses were being let rather than sold, and this would “squeeze rent prices down a little”. In this market, students would find “better deals and more choice”, he said.

As the Royal Institution of Chartered Surveyors showed property values sliding 5 per cent in Coventry and 4 per cent in Leamington over the summer, a survey by _The Boar_ found letting companies and landlords cautious about their outlook for the student housing market.

“It has affected everyone,” said Dr. Gurmit Singh, a landlord in Leamington Spa. In particular, tighter credit is preventing “new landlords [from] coming in”, he said.

Facing a harsh business climate, Mr. Lucas said his company, Coventry’s largest letting agent serving students, had no choice but to “go with it”.

Other estate agents are also doing their best to put a brave face on tough circumstances. Many take comfort from the fact that offered rents are unlikely to fall this academic year.

Tara & Co., a major property agent in Leamington Spa, said falling house prices had caused “minimal” damage to landlords’ financial positions.

The group said growing numbers of students would ensure demand remained sufficiently robust to prevent rents from falling in the near future.

Tara’s outlook was echoed by others, including Steve Shergill, director of Coventry’s Envisage Lettings, who expected rent to hold “steady” for the time being.

But they may later find their hopes ill-founded. A survey released by the RICS this month shows rent in the Midlands and Wales expected to fall by 1 per cent in the next twelve months. This is the first time in five years that rent growth in the region has turned negative.

Dr. Singh was candid about his expectations, saying he didn’t see “much rental price growth”. Properties “in the wrong areas” risked suffering significant falls, he said. But with students often renting in the town’s central areas, his properties had not been affected “so much”.

He revealed that he will invest in housing near the train station that would accommodate 200 students. His optimism about growing demand for student housing in Leamington stems partly from the low drop-out rate in the university and the steady growth in admissions.

But Dr. Singh says it also reflects a growing preference among Warwick students for Leamington. As a result, “quality properties [in the town] go earlier and earlier,” he says.

Philip Jones, a landlord in Coventry, says this might have to do with the “finite” supply of accredited accommodation in Earlsdon and Foleshill, two neighbourhoods preferred by students because of their proximity to campus.

Mr. Jones does not expect many more such houses to be rented out in these areas even during the downturn.

But he is an exception in his confidence about business. The end of the housing boom has left property owners “playing a guessing game”, says Mr. Shergill.

The uncertainty is not limited to landlords, either. Mr. Jones expects freshers to still face a difficult choice this year. And, “if they aren’t too careful”, they might yet face the same horrors as many of their elder peers.