Is the Article 4 Direction detrimental to student property landlords?

The Article 4 Direction is a ruling passed by government that effectively requires special planning permission to be granted on the conversion of a single family home into a rental property of three or more unrelated tenants.

In cities like Nottingham, Leicester and Newcastle family homes were rapidly being converted to student let properties thereby allowing landlords to reap far higher rental returns. These City Councils have adopted the ruling in order to protect the number of single-family homes. The impact could see a drop in supply of student accommodation and while demand continues to grow it will lead to increases in rental income and low vacancy rates.

The Residential Landlord Association (RLA) Members have vehemently opposed the implementation of the Article 4 Direction in Nottingham, Leeds and Leicester. RLA members stance is that landlords have been making intensive use of the existing stock in place where it might otherwise be under-utilised and poorly maintained and that councils have enough legislative power to protect housing stock.

Whatever landlords may feel, this ruling is being adopted in a number of cities across the country. Some investors are seeing it as an opportunity to take advantage of the situation.
In cities, like Leicester, there are over 38000 students and two top-ranked Universities. The limitation of supply of houses means that landlords are opening their eyes to the potential of city centre studio apartments.

One developer is building a development of luxury studios located only 160 metres from the university campus. The Leicester Student Investment is geared towards postgraduate student population of 9,800, which represent nearly 26% of the overall student population.

With ever-increasing numbers of postgraduates, purpose-built student accommodation overcomes the concern raised by the Article 4 Direction being implemented. “Postgraduate students are more in favour of having their own privacy than staying in student houseshares” says Arran Kerkvliet of One Touch Property.