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Giant asset manager buys 1,300-home HMO portfolio for student housing
A giant asset manager has bought a 1,300-home portfolio of houses in multiple occupation (HMOs) for use as student accommodation.
Giant asset manager buys 1,300-home HMO portfolio for student housing #UKhousingA giant asset manager has bought a 1,300-home portfolio of houses in multiple occupation for use as student accommodation #UKhousingBrookfield Asset Management, one of the largest owners of real estate in the world, has bought a 1,300-bed student housing portfolio with UK co-living investor Student Homes Management for £100m.
The duo acquired the homes from Condor Properties, a student housing owner-operator specialising in HMOs.
The deal is Canadian-American property giant Brookfield’s first foray into UK HMOs. The company previously held a substantial portfolio of purpose-built student accommodation (PBSA) in the UK and has built large PBSA portfolios in Europe.
Student Homes Management already manages 2,000 student and co-living homes in the UK.
The investors have appointed Loc8me to manage the portfolio of student HMOs, which is spread across six university cities including Bristol, Bath, Manchester, Exeter, Liverpool and Cardiff.
Inside Housing understands that the acquisition is the first as part of a joint venture between Brookfield and Student Homes, which has plans to expand and upgrade the properties to create a value student housing offering.
The joint venture is in the early stages of considering a broader acquisition strategy in the HMO space, focused on the student and young professional markets, across existing suburban houses.
The Condor Properties acquisition is the largest student HMO sale in recent memory. It takes place shortly after the Renters’ Rights Act received royal assent last month, adding increased regulation to both student HMOs and PBSA.
Under the Renters’ Rights Act, the grounds for possession for student HMOs include a four-month notice period.
HMOs must be let to full-time students and required for a new group of students in line with the academic year. It also cannot be used if the tenancy was agreed more than six months in advance of the tenancy starting.
As for PBSA, there is a two-week notice period requirement and in the 12 months prior to the start of the tenancy, the property must have been let to students. It can also only be used by specified educational establishments.
Domestic UK students and students on lower incomes often live in HMOs, which tend to be more affordable, while PBSA caters for higher-income and international students.
According to property agency JLL, the lowest quintile of household wealth in England has seen the highest growth in student numbers over the past five years, rising 29% between 2018-19 and 2022-23.
JLL warned that more diverse student accommodation is needed to account for fast-growing demand from low-income students and rising numbers of international students concentrating in key UK cities, to help alleviate pressures on private rental markets.
In July, Inside Housing investigated whether PBSA developers could change their business model to cater to domestic students.
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