Letting to Students
Most students are looking for comfortable accommodation they can share with their friends. They want convenience (close to their learning centre) and above all, good value. Provide good quality accommodation and be competitive on price by researching the local market, and try to keep your price just below the competition – you should then be in demand and always fill your student letting.
The student letting market
Government initiatives over the years have encouraged more young people to study, and for more foreign students to come to Britain. Participation of foreign students at universities has risen by more than 60 per cent in the past 15 years. This is a trend that is expected to continue, with foreign student numbers expected to rise from 15 per cent of all students in 2008 to over 20 per cent by 2018.
This is creating demand for good student accommodation in university towns. Despite the growth in the provision by student halls, and purpose-built accommodation, there is still good demand for good quality small-scale lets at the right price.
Students are generally not too fussy about having state of the art accommodation, but standards are rising along with expectations. Two things that students do demand are (1) a good broadband Internet connection, and (2) a communal area – one room with seating – for socialising.
It is usually easy to attract students or groups of student tenants if the property is close to a university or college, and you will be able to let on a yearly basis, with students booking up individually or as groups from each January onwards.
Points to Watch:
HMO accommodation tends to appreciate at a lower rate than standard residential housing, and mortgages are of a commercial type, attracting a higher rate of interest than a buy-to-let mortgage.
There is an increase in purpose-built (large block) student accommodation, so in some locations demand for small-scale private housing may be affected.
Wear and tear in student housing is more pronounced that in standard lets, so expect to replace items such as furniture and furnishing more often.
Students generally can’t provide good credit scores, so credit references should be obtained from the guarantors – usually their parents.
Depending on the area and demand, you may have a couple of months void period every summer, though that gives you space to do any internal work required. Some locations, particularly in or near London, charge students for a full 12 months tenancy.
Student tenants can be noisy and disruptive for neighbours, so tough but fair people management is sometimes required, otherwise you could face penalties from your local council.
Requirements of Student Landlords
Multi-occupied buildings mean that returns (yields) can be high (15% is not uncommon) but expect more intensive management involvement.
Most student accommodation falls under the Houses in Multiple Occupation (HMO) category which means:
- Planning permission will be required in most cases for a new or conversion HMO from Use Class C3 to C4
- An HMO must meet additional safety standards such as fire doors throughout, hard wired fire alarm system etc.
- HMOs require more extensive management which comes under The Management of Houses in Multiple Occupation (England) Regulations 2006 – see here
- You may need a licence to operate.
Point to watch when letting to Students Use the University Accommodation Service
Take on students that have been recommended by their university or college if you can. Often they will come as a group with their friends when they leave student halls for their second year. If the accommodation and you are to their liking you may keep them for the following year.
Have a Good Agreement
Have a comprehensive and up-to-date letting agreement (www.landlordzone.co.uk/documents) which includes a clause stating that if one student tenant leaves, it is up to the others to find a replacement. Otherwise they would have to meet the total costs of the tenancy.
Have a Good Inventory
Have a comprehensive inventory of all items in the property and the state of the walls, floors etc., ideally drawn up by an independent inventory clerk. It must be made clear to the tenant that they are responsible for leaving the property as they found it, or paying for repairs and redecoration.
It is not normally possible to get a credit check or employment references for a student, so to provide the necessary level of security on payment, damage to the property or other breaches of the tenancy agreement, you need a guarantor.
Student guarantors are usually parent or guardians, and should be credit checked and reference. In the event that the tenants breach their contract in any way, the guarantors become liable.
Guarantor may have joint and several liability, i.e., they guarantee all the students in the house on a joint tenancy. Alternatively, agreements may be set-up in such a way that a guarantor guarantees just his or her student relative.
Guarantor agreements can be difficult to enforce if they are not watertight, legally. The guarantor must be informed of any issues, developments or changes in the tenancy in writing, and they must see and approve the letting agreement before it is signed.
Become an Accredited landlord
Universities usually have an accommodation office who works closely with those landlords they know, and importantly have become accredited. This means that the property has been inspected by a local authority provided accreditation scheme or one administered by the university, and has passed minimum safety standards.
Provide suitable furnishings
Students may not be looking for state-of-the-art fashion in furniture and furnishings, but what they do want are serviceable and durable furniture which will stand up to hard use.
In general it is false economy to buy the cheapest furniture and furnishings, so any purchase should be for study and durable items which are presentable and comfortable.
Décor should be neutral colours, with hard wearing and darker shade carpets – light shades in carpets show dirt very quickly and poor quality carpets will not last long.
Do some homework and learn the rules
HMO properties must meet special safety standards and you may need planning permission and a licences to operate. In addition, HMOs require regular safety checks and maintenance to meet the regulations, as stated above.
Not all HMOs will require a licence. Local authorities will determine which property types must be licensed. It is a good idea to contact your local authority at an early stage to make sure you are operating within the law. There are heavy penalties for landlord who break the law on these matters and you could be committing a criminal offence if you do not comply.
Have an Information Pack and House Rules
Make sure your tenants have all the information they need look after the property. Young students are usually naïve when it comes to managing a home so be prepared to instruct them personally. Stop taps for water and gas, electrical fuses, toilet and sink drains will probably be a total mystery to them. Warn them about freezing pipes in winter and leaving heating on at a low level when the house is unattended.
You need to be firm but fair with students to make sure they manage their house and themselves properly and avoid trouble.