September Shifts
- Toby Auld
- Sep 12, 2023
- 4 min read
How the Academic Calendar Influences the Housing Market
September heralds the start of a new academic year, bringing with it a flurry of activity and considerations for homeowners and potential buyers. As families settle into school routines, the housing market also feels the ripple effects. Let's explore some of the most relevant topics that every homeowner and investor should be aware of.
School Districts: More Than Just Education
The age-old saying, 'location, location, location,' rings especially true when considering the impact of school districts on property values. Homes in top-rated school districts often command a premium, reflecting the value families place on quality education.
In 2017, the government's latest study on the subject found that homes near the top 10% of primary schools had prices 8% higher than those in neighbouring areas. Similarly, properties close to the top 10% of secondary schools saw a price increase of 6.8% compared to their surrounding areas. [1]
But it's not just about exam results. The overall well-being of students, extracurricular opportunities, and school facilities play a pivotal role in a school's appeal. In the UK, OFSTED ratings can also significantly influence local property values. An 'Outstanding' rating can transform an area into prime property territory. Given the higher property values in these areas, potential homeowners might need to strategise their financing options. Engaging with a mortgage adviser can provide clarity.
The Daily School Run: A Significant Factor
For many families, the daily school commute heavily influences property choice. Living closer to schools can offer substantial time and cost savings. Imagine the reduced fuel costs, the possibility of walking or cycling to school, and the environmental benefits that come with it. Geographical location is also regarded as admission criteria in 88% of secondary schools in England. [2]
Areas with reputable schools often boast other family-centric amenities, enhancing their appeal. Safety, too, is paramount. Reduced travel time, especially for younger children, and established pedestrian routes ensure peace of mind for parents. However, the desirability of living near top schools can drive up property prices. It's essential to strike a balance between the benefits of location and financial sustainability.
The Unique Dynamics of Student Accommodations
With universities bustling back to life, the student housing market becomes a focal point. Towns and cities with prominent educational institutions see a surge in demand for student accommodations. This seasonal rise and fall often mirrors the academic calendar, with a typical academic year spanning nine to ten months, potentially leaving properties vacant during the summer months.
While this sector promises consistent rental income, it's not without its quirks. Students, by nature, are transient tenants, meaning landlords should be prepared for annual tenancy changes. With the frequent changeover of occupants, properties rented by students often undergo consistent wear and tear. As a result, regular maintenance checks become necessary, and robust rental agreements are essential to address potential disputes and property upkeep.
Moreover, the rental patterns in student housing can be less predictable than in the traditional market. Some students may opt to retain their accommodations year-round due to summer courses or jobs, while others vacate right after the academic year ends. Landlords often grapple with this fluctuation, making it challenging to accurately forecast annual rental incomes.
On the brighter side, the transient nature of student accommodations offers a potential advantage: the chance for higher per-room rents. Especially if properties are strategically located near university campuses, they can command a premium. However, to successfully navigate this sector, understanding the financial landscape is essential. Some lenders even offer tailored mortgage products for student housing, taking into account these unique rental dynamics.
Ideal Flatmate's research sheds light on the financial dimensions of the student housing market and shows average rents around top-ranked universities in the UK. Drawing on data from PropertyData, they assessed the average monthly rent for the outcodes (first half of the postcode) of the top universities. This assessment provides a glimpse into areas with a mix of top-notch students, diverse affordability of accommodation, and lucrative rental yields - vital insights for UK landlords looking for a rewarding investment. [3]
Table 1: University Rent and Ranking [4], [5]
Table 2: University Average Rental Yield [4], [5]
September's housing market is intricately linked with the cycles of the academic year. Whether you're considering investing in student accommodations, eyeing properties in top school districts, or weighing the pros and cons of living near a school, it's essential to be informed.
Engage with a mortgage adviser to navigate the complexities of the market, ensuring decisions that are both financially sound and beneficial for your family's well-being.
[1] UK Government: Department for Education - Ad hoc research note - House prices and schools: do houses close to the best performing schools cost more? - 2017
[2] University of Bristol - Economics Blog - Who gets in? Where you live matters for where you go to school - 2023
[3] Ideal Flatmate - The UK’s best universities for affordable rent and high rental yields
[4] Property Data - Average Rental Yield Outcode Search - 2023
[5] Complete University Guide (CUG) - University League Tables 2024 - https://www.thecompleteuniversityguide.co.uk/league-tables/rankings
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