The UK is a world leader in higher education. Britain is the third most popular country in the world for international students (August 2021) and the number of international students applying to UK universities has doubled in the last 20 years.
Many landlords look to invest in student properties, for the above and for the following reasons:
- Demand is high and the student rental market doesn’t fluctuate to the same extent as the rest of the private rental sector.
- Rental cycles are predictable and most student lets follow a pattern, as students will live in a property for the duration of their academic year. Sometimes longer.
- The model is financially robust. Often the yields are higher for student lets, students will pay their own bills and, full time students are exempt from Council Tax. In addition to this, your void rate will be low, because students will sign a contract for the whole year.
Despite all of the above, student lets have garnered a bad reputation in some circles and we often find landlords shaking their heads vigorously and taking a sharp intake of breath, when we discuss their options and mention the property model as a possibility. With all the obvious benefits, why is this the case?
- Student lets tend to fall under the definition of HMOs (3 or more tenants, from 2 or more households) which is a compliance and regulation heavy property model. HMOs (Houses of Multiple Occupation) are not for the faint hearted or inexperienced.
- Some students, especially first and second years, may not have lived independently before and find certain things like changing lightbulbs, budgeting for food, conserving energy, locating a fuse-box, taking out bins, getting on with their housemates etc., challenging, as they have never dealt with them before. This often causes disharmony within the house and lots of phone calls to the landlord or the agent.
- Students can cause more damage, leaving the landlord with a large refurb bill at the end of a tenancy. In our experience, this is the top concern of landlords when discussing student lets.
- Drugs, parties, late payment of rent, angry neighbours – all self-explanatory but are things we hear often, when discussing previous experiences with landlords.
By far and away the biggest objection from landlords seems to be damage, with one landlord telling us “…it was fine, I just expected to have to decorate the whole house at the end of every tenancy and wipe obscene drawings off the white goods…” Some agents even recommend a slightly shorter tenancy, to allow time for a repaint between turnarounds, because this is their expectation of the tenancy.
So, with all this in mind, how can you plan for a successful student tenancy, which won’t break the bank and leave you prematurely grey?
- Firstly, we’d say, choose better tenants! Just because they’re students, doesn’t mean they have to be a nightmare. Know what types of students tend to make better tenants (those looking early, as they will be better organised and more diligent and more mature students like post grads for example), interview them well and use the same criteria you’d use for selection of other tenant types, make sure that you see the whole group not just the lead tenant and ensure that you watch the group dynamic – how do they behave and interact with each other?
- Ensure you have Guarantors, reference the Guarantors and make sure that your Guarantor Agreements are legal and watertight.
- Take deposits and protect them in a Government backed scheme.
- Prepare a clear inventory, complete with pictures and advise every tenant in the group that they must be there at the check-in to go through the inventory. Make sure that they understand that you will also expect this at the check-out.
- Go through the contract with them, to make sure that they understand the document and what is expected of them and where they should go if they have a problem.
- Give them a house booklet – an abridged version of the contract, detailing things like emergency numbers, bin rotas, Wi-Fi codes, location of the stop cock, bus routes and common “what to do ifs…”
- Communicate with them well and clearly throughout the tenancy.
- Understand that they may not be as experienced at living independently and have videos to hand on common household tasks like changing a lightbulb, repressurizing a boiler, locating a fuse box.
- Have a handout on mould as part of the contract and draw their attention to it, explain what causes it and why this is important.
- Prepare to be patient – if you act negatively every time they report something, guess what will happen… and, trust us, you do want to know!
- Inspect your property regularly.
With some preparation, good and clear communication, common sense, and goodwill student lets can run very smoothly. Our advice would be to take the time and effort setting things up correctly and be diligent with your management processes and you will reap the benefits of this lucrative and popular model.
If your previous student tenants damaged your property or managing student lettings gives you nothing but stress and hassle, then give us a call on 0117 440 6789 or email us here so we can help make being a student landlord simple for you!
