The past few years has witnessed a dramatic increase in the number of higher education students, due to government initiatives to encourage young people to stay in education for longer.
With a rise in the number of students, inevitably there is also a higher demand for student accommodation, and purpose-built halls of residence are slow to cater to these growing numbers. Due to this lack of availability, students are having to turn to off-campus student accommodation. Private landlords can make the most of this opportunity by letting their property to student tenants. But you may first want to consider the pros and cons of letting to student tenants.
Advantages to Letting to Student Tenants
Students tend to not be so fussy when it comes to the state of the property. It doesn’t need to boast the latest trends in interior design and home décor, so long as you provide the most basic of essentials such as bedroom furniture and kitchen utilities.
Houses with multiple rooms can easily house one tenant each. You may even want to convert the living room into a bedroom unless you want to maintain it as a communal area for the students. This can result in high yields as you can charge rent per person rather than per property. Though to the individual student the rent may seem quite low, the yield from the property can easily add up to be more profitable. The closer the property is to a university, the more you can charge for rent and the easier it is to find student tenants.
Student tenancies are far more predictable. You can get into a seasonal flow of things; when your tenants are likely to move out or move in, how long they’ll be renting for, and more. This allows you to be better prepared for these events. Students will also start looking for accommodation ahead of the academic year, so you can line up students moving in and moving out well in advance.
- 69% of landlords and letting agents prefer to let to students.
- 84% agree that students make good tenants.
- 76.5% say that student lets generally lead to better yields
Disadvantages to Letting to Student Tenants
You will need to let the property as furnished. Student tenants are unlikely to be bringing along their own furniture and kitchen appliances. So furnishing the living room with sofas, making sure that the kitchen has a fridge freezer and oven, and simple bedroom furniture in each bedroom is necessary. This can be quite an expensive investment to begin with, so you should take out landlord contents insurance to cover your own items and furnishings. It is their responsibility however to insurance their own items.
Without generalising all students, costs of maintenance and repairs for the property and replacement of damaged furniture will have to be taken into account when setting the rent. Students may be more likely to hold parties or damage the property, accidentally or intentionally. It is wise to keep a detailed inventory of all supplied items and furniture, as well as the condition of the property itself.
Referencing tenants can be impossibly difficult if you attempt to use the standard process. They’re extremely likely to have been living with their parents prior to moving out for university and will have had irregular income if any at all. It is therefore crucial that they have a guarantor to be financially responsible for the rent should you fail to receive it on time. You could also ask potential tenants for personal recommendations and references from their university. Many universities now offer these recommendation services for students looking to rent privately.
If you have at least three occupants living within the property, each with their tenancy agreement, you may need a HMO licence.
As your property is most likely to be your tenants’ first “home away from home”, they may exploit the lack of adult supervision and behave as one would expect – like students. They may make a mess, struggle to clean up for themselves or misunderstand their responsibilities as a tenant, but this is a learning phase for them. You might want to make it clear that they will be billed for any damages, or have the costs of repair taken out of their deposit, and give them each a “welcome pack” when they first move in. This could contain things like:
- rubbish day,
- recycling,
- how to work the various appliances,
- health and safety,
- security and locks,
- rules of the house,
- their responsibilities to you,
- and your responsibilities to them.
The summer holidays may be quiet if you’re in between tenants during this time, though some tenants may still want to remain in the property over this period. This may mean that your rental yield is lower during these months, but this time could be used to carry out repair and maintenance before the new tenants move in.
When it comes to landlord insurance, student tenants are considered to be “high risk” and may, therefore, affect your premium. But insurance is well worth taking out to financially protect your investment against the risks of storms, fire, malicious incidents, unforeseen accidents, public liability and loss of rent!
At Ashburnham, we can provide you with landlord insurance for student tenants!
Get a quote now online, or call us for free on 0800 1696137