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Here Comes The Student Squeeze

The new ‘free year of tertiary education’ policy will put even more pressure on stretched city rental markets, says Aaron Tunstall. HERE COMES THE STUDENT

By: Aaron Tunstall

28 February 2018

A year of free tertiary education and an extra $50 a week student allowance and loan entitlement: Doesn’t sound like something related to the housing market, but all these economic drivers are interconnected. Will these policies increase student numbers? Probably. If you’re not sure about what you want to do when you leave school, a free year at university is much more appealing than spending thousands of dollars before figuring out it is not for you. It will certainly be interesting to watch how it all plays out.

Having said that, will most of those students be serious? I really hope we don’t see a mass influx of school leavers who want to have a good time but don’t care about learning. It’s a bit like the staff party. When there’s nothing to pay, a fair percentage will moan about it or pull out at the last minute. When it has even a small price, the ones who really want to be there come along, and that usually makes the whole event more enjoyable. I’m in favour of free education in general, but I must admit my $25,000 student loan didn’t hold me back much – it was paid off within a few years of working. Then again, medical students’ fees are $15,000 a year or more, and there are stories of people with student loans the size of small mortgages.

Whether a student is serious or just mucking around, they still need somewhere to live. I think this new policy is going to lead to more student tenants in the main centres, particularly around our best-performing universities like Auckland, Otago, Victoria and Canterbury. This is going to put pressure on the rental market, which is already stretched to capacity in Auckland and Wellington. Development in Auckland has stalled, with off-the-plan apartments slow to sell, so expect to see a serious rental shortage in the immediate future, and rising rents.

‘I think this new policy is going to lead to more student tenants in the main centres, particularly around our best-performing universities’

Students aren’t always popular tenants, and can struggle to find a place to rent. Our company has a long history of working alongside the University of Auckland and AUT – we know the student market as well as anyone.

Students can make fantastic tenants. We have some who are tidy, responsible, pay their rent on time and treat their apartments like they would their own homes. There are obviously some less well-behaved students, but often the rowdy ones choose run-down five-bedroom houses rather than one-bedroom apartments.

Dealing with the younger student tenants sometimes means educating them on how to behave in a flat. For many school leavers it’s the first time they’ve lived away from home, with nobody to tell them to pick up their clothes or take the mouldy yoghurt out of the fridge. We do some of this work, going into universities to talk to the
students about what’s expected of a good tenant – it seems to help the teenagers get a handle on what needs to happen. In many cases, when it goes badly we’ve got mum’s or dad’s details and they will help sort out the rent arrears or damages. That’s not usually an option with residential tenancies, so it can be a safety net for landlords.

The other side effect of the “year of free education” will hopefully be to put students on a better footing financially. A three-year degree is instantly a third cheaper; a four-year degree has a 25% discount. This crop of students should have smaller loans and a better chance of getting into a position to buy a first house. Great news if you’re the parent of high school students right now.

Aaron Tunstall is the general manager of award-winning Impression Real Estate, which specialises in property management and sales and manages over 1,750 Auckland apartments.

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