Oh, how our summer has changed!…
Another crazy summer in lettings is over. But how crazy was crazy?
Summers at every letting agency in Scotland are crazy, the number of checkouts and check-ins that need to happen fall into the thousands and this one showed a completely different behaviour from previous summers. This was the first summer we’ve really seen the impact of the Private Rented Tenancy (PRT) after its launch in Dec 2017. The key element of the PRT that affects tenancy timings is that tenants are no longer tied into a fixed period and so can leave whenever they like (giving 28 days notice).
When the legislation was released this initially spooked a lot of landlords with student HMO properties who worried about their properties becoming empty over the winter months or sitting empty over the summer. But, how has it played out in reality?
A good place to start is a chart and its trends.
This chart shows the total of Umega tenant move ins (student, professional and family homes) per month over the past 3 years. As you can see there are clear patterns on how the move ins behaved throughout 2017 and 2018. Historically we have seen steady growth from spring, peaking in September before dropping off into the Autumn and winter months. Interestingly, in 2019 (the grey line) there is a new peak in June shaped by the changes on the PRT, followed by the common trend of a spiky September.
Concentrating on student HMO properties.
As mentioned, the chart above includes ALL Umega move ins (students, professionals and families) however if we focus in on just student HMO properties, tenants moved into 63 Umega student HMO properties between May and September this year. The chart below clearly illustrates the large number of move ins in June, consistent with that of our overall portfolio.
What we can learn from this year’s tenant activity .
The historical pattern of a build up through the summer to a crescendo in September seems to have changed. This year we saw a spike in June before a lull in July and August, then another spike in September. With many 2018-2019 students taking the opportunity to serve 28 days notice to vacate as soon as their studies were complete in May (instead of having to continue to pay rent over the summer until the end of a 12 month lease), properties were becoming available earlier in the year. It appears that incoming tenants were then snapping up these properties right away. Anecdotally we saw a large chunk of tenants signing up and paying for properties from June but not actually picking up their keys until August or September (sometimes 1 or 2 tenants would move in earlier in the summer but the flat was not fully occupied until just before term time in September).
Rather than the PRT leading to properties sitting vacant all summer as some feared (between 2018-19 tenants moving out and 2019-20 tenants moving in), the 2019-20 tenants simply signed up at the beginning of the summer instead of the end to bag the properties they wanted.
What this trend highlights is a potential shift in the market with leases running for 12 months from June – end May simply shifting the 12 month student cycle forward.