Buy-to-let in South Liverpool: Students shift to city centre
Once regarded as the go-to location for any buy-to-let landlord eyeing high returns on a student rental, Greenbank is now seeing an increasing number of these property owners selling up.
Your Move investigates what’s driving this trend and asks whether it could be good news for house hunters eager to buy in one of South Liverpool’s most sought-after suburbs.
Words by Lawrence Saunders
The last decade has seen an explosion in the number of Liverpool students drawn to the seemingly endless supply of purpose-built city centre schemes and away from the traditional residential heartlands of Smithdown, Wavertree and Greenbank.
As tuition fees have risen so, it appears, have the accommodation expectations of the city’s booming student population.
“Traditional student housing that was once popular on the likes of Smithdown Road is no longer cutting it for today’s students,” says Lee Darwen, operations director at Caro Developments, which has three student developments across the city centre including The Bridewell, City Point and Shaw Street.
“Many student landlords in the city centre have raised the expectations of student living – students are shifting towards central purpose-built student complexes which provide perks such as 24-hour security and on-site gyms.
“Living in the city centre also means that students will spend less money on travel as many of Liverpool’s main campuses are within walking distance. If students are spending more money on their room, they are saving on other costs.
“With all of this in mind, it’s easy to see why many students are trading in South Liverpool house shares for luxury studio flats in town.”
In Greenbank, where the most recent census in 2001 put the number of students living in the ward at around 7,000, the emergence of a more discerning customer has contributed to a drop-off in demand for rooms in houses of multiple occupation (HMOs).
“Investors aren’t really looking at L18 and Greenbank for HMOs,” explains Elizabeth Fairhurst, area lettings manager at Abode.
“I still get enquires for HMOs from investors who want to get higher returns on their investments, but I tend to advise them that they won’t get those high rents from students anymore.
“Although we don’t get a huge amount of students coming to us for accommodation, the bulk of those that do are going for the snazzy ones in the city centre which offer just a one-off fee that they can pay every month.
“We do still get people in their final year or on post-graduate courses who will contact us and still want to find a professional let.
“That market is still there but landlords potentially don’t get as much of a return than they would have done if they were doing a room by room – we tend to let them all on one Assured Shorthold Tenancy (AST) to professionals.”
Of course, it would be folly to suggest that the falling number of buy-to-let landlords in Greenbank and the wider L18 area is down to student migration alone.
Forthcoming reductions in the amount of mortgage interest tax relief available to buy-to-let landlords and the current ban on ‘to let’ signs in ‘the Dales’ area must also be considered.
Liverpool City Council introduced the ban on visible advertising for rental properties in 2015 – the sanction covers an area in the Greenbank ward bounded by Gainsborough Avenue (evens side only), Smithdown Road and the railway line.
In the main, the new restriction was well received and according to a city councillor for Greenbank, the ban has played its part in fostering a more diverse and healthier resident mix in the area.
“The number of ‘to let’ signs was very high, it was attracting criticism from residents and also highlighting properties which could be targeted by criminals,” says Councillor Lawrence Brown, Green Party representative for the ward.
“I think we’re beginning to see quite a successful move from a very student heavy area into a mixed area. This is what local residents and students alike both want to see – a balance.”
Despite this, questions remain over what effect upcoming tax changes for buy-to-let landlords will, and have already had, on the appetite for investment in Greenbank.
From April, higher rate relief on mortgage interest payments – a valuable business aid for buy-to-let borrowers – will start to be phased out and will disappear completely by 2020.
Elizabeth, whilst damning in her assessment of the impact the changes will have on the market in the short term, remains confident speculators will continue to see property as a sound investment option.
“We’re beginning to see quite a successful move from a very student heavy area into a mixed area. This is what local residents and students want to see – a balance.”
“It will stop people investing and some current investors will sell up,” she warns.
“However, with the correct advice on how to look after a portfolio and identifying the right areas to buy, property is still the best investment for return.”
On a more positive note, is it possible these former student properties can be a route into Greenbank for young homebuyers who previously feared the area was financially out of reach?
“Yes potentially, it depends on how much work is required and if it’s too much for a young couple with full-time jobs,” adds Elizabeth.
“It’s certainly good for other investors as well – there is room for investors to purchase those HMOs, get a return on them and then sell them to a young professional couple – it suits them better to buy something that’s already done and ready to move into.”
James Howarth, branch manager at Sutton Kersh, agrees and suggests landlords have begun to look further up Smithdown Road for property which presents a more attractive investment option.
“Greenbank has become a lot more appealing to owner occupiers in recent years, which is evidenced by the increase in house prices.
“Investors will be aware of this and realise that they can buy a similar Victorian terrace, not too far away – say along Smithdown Road – which will generate a similar annual income in addition to releasing equity for further investment.
“Greenbank has seen substantial capital growth in recent years and many people believe further capital growth will now be limited.”