With many universities across the country stating that a “normal” fall term is unlikely, students are hesitating to sign on the dotted line of a lease. Educational institutions are now preparing for likelihood that many courses and programs for fall 2020 will be delivered online, with a side of smaller groups of in-person learning.
It’s a fundamental unknown for landlords and students alike – what will happen in the next academic year? This is fuelling uncertainty in the student rental market.
Landlords are reporting that units that would typically rent something within hours or the day of a listing, are now sitting vacant for a week or two weeks. Additionally, there’s been some turnover as students ended their tenancies in April after classes went online. Compounding the concern is the issue of international students, who are returning to their native countries. Factor in other considerations, like the inability to show units and all the necessary safety precautions, and it’s little wonder why there’s been a lag in filling these units.
With students unsure of whether or not they need to attend classes in-person or not, they are adopting a wait-and-see attitude. The news has caused some concern for property managers specializing in renting out rooms to students as these types of rentals represent a source of great cash flow and higher income due to higher density within each unit, higher propensity to pay rent.
The Trickle-Down Effect
With the fall semester in flux for college and university students, the trickle-down effect could be far-reaching, especially for cities and towns that heavily depend on students to help drive the economy of local retailers, restaurants and real estate.
Towns known for their vibrant student life, like Guelph, Ontario, have seen rents dip. Monthly rent for a two-bedroom unit in Guelph dropped to $1,647 in April, down 15% compared with March, according to a report by national rental listing website Rentals.ca.
Looking forward, many on-campus residencies are announcing new policies of allowing only one student per residence room, meaning that the on-campus housing population could drop to 60% of the usual number. Needless to say, the impact of those ‘should I stay home or return to school’ decisions will have an effect on the student rental market.
Landlords are currently in a holding pattern as the percentage of students returning is unknown at this time. However, while some students may be looking to save money by heading back to their parents’ home, others will be keen to continue their university experience, even if socially distanced.
In short, it’s a dilemma landlords are facing: On one hand, if the total number of students drops significantly, some landlords may be forced to rent to regular tenants, increasing the local stock. On the other, if fewer students can be housed on-campus, and student numbers hold steady, it could open up new off-campus opportunities.
Looking ahead to the 2021/22 term, there is potential that there will be a larger number of first-year students as a result of students deferring a year opting to take a gap year rather than lose out on the student life experience.
A Proactive Approach
Property leasing teams are taking a proactive approach by combing through the last couple of years of guest card information and creating marketing campaigns that recognize the uncertainty of the situation, and talk about how they are working with current student renters and a have a plan in place to take care of their future resident base.
As with every aspect of this pandemic, the impact may be felt long after the fear of the virus has gone.
Regardless of the future, it is in every landlord’s best interest to lower costs, improve screening and automate as many manual processes as possible. Online leasing, tenant portals and “touchless” transactions are a normal way of life when dealing with Gen Z.
Our student housing software helps you streamline the marketing process, accept online applications and automate the approval process. It also integrates a resident portal makes it easy to pay online and request maintenance. See our pricing and book a demo today.