Are you thinking of investing in the student property market? It’s a great niche to work in, as the number of students attending university grows every year, but there are some things to be aware of. Renting to students is definitely different to other types of tenants, so here is everything that you need to know.
About Student Tenants
The student accommodation market is growing. The Government is encouraging more school leavers to go into full time education, but we also have a growing number of international students who come to the UK to study. This means that there is more demand for student accommodation. Most students will go into halls for their first year of university, before choosing a house or a private flat with their friends for the next year. Student tenants are very easygoing and undemanding – for most of them, it’s the first time renting a property of their own, so they don’t expect the latest furniture or top-tier decor.
If you’re considering advertising your property to students, you should consider the timing of your advert. Students usually search for their accommodation for the following year between January and March, so advertising around that time will get you the most responses. In areas with a high student population, you might even want to advertise earlier as there is more competition for property.
Choosing a property
When choosing a property for student tenants, there are some factors that you should consider. You’ll want a minimum of three bedrooms with large communal areas. If the property has more than one bathroom, this is an enormous selling point. Victorian properties often work well as a student house thanks to their large bedrooms – you could also convert a ground floor living room into an extra bedroom to make the most of the base. The house should be no more than 30 minutes walk away from campus (remember that most students don’t have cars) and be near local amenities like shops, pubs and gyms. Students expect their houses to be fully furnished, so make sure you provide all appliances as well as a desk and wardrobe. Ample storage is a plus – so plenty of wardrobes and drawers will certainly help you to rent the property out.
If you’re planning to let to more than three tenants, you will need a ‘house in multiple occupation’ licence. You can get this by contacting your local council – it’s a special licence for letting to more than three people who aren’t a family, with shared facilities like a kitchen and bathroom. You’ll need a large HMO if you’re letting to more than five people. As part of the HMO licence, you’ll need to send gas and electricity safety certificates every year. If you let out an unlicensed HMO, you could face a hefty fine from the council.
Landlords letting to students must find the right insurance. Some insurance companies deem student tenants to be a higher risk and may increase your premiums, but you must declare that you are planning to let to students before you purchase insurance or you risk invalidating your policy.
The number-one essential for students is fast broadband. Students need wifi to do their assignments, catch up with friends and family at home and stream their favourite shows. It’s worth investing in an unlimited broadband connection so that your tenants can be online at the same time with no restrictions.
The Tenancy Agreement
The first step to renting to students after you’ve chosen your property is to consider the type of tenancy that you will offer. A single tenancy for each student, or a joint tenancy for all of them? A joint tenancy is more risky, because if one student drops out you could risk losing your money. A way to get around this is to put a clause in the tenancy to state that the tenants have to find someone else, or pay the person’s share of the rent.
You might also want to use a guarantor for every tenant – usually a parent or guardian. This is because student tenants often haven’t lived in their own property before, so they don’t have any credit or reference checks available. Use of a guarantor ensures that the parent/guardian will pay the rent if the student doesn’t, so you won’t lose any money.
Each contract for your property should be a year long. You can also offer 9 month agreements, with a gap in summer when most students go home, but for convenience, a year- long agreement works better.
Rent and Bills
When you come to deciding how much rent to charge, look at what other student properties nearby are charging. With a student property, maintenance bills can be higher so you will want to compensate for that. Many students like the idea of their bills being included in their rent, as this avoids them arguing over the thermostat and splitting the bills themselves, so consider offering this.
When you receive a deposit from the student, remember to put it in a deposit protection scheme. This is a legal requirement for student landlords.
Before the Students Move In
So, after you’ve rented out your property and drawn up the tenancy agreement, the work doesn’t stop there. Before your tenants move in, you will want to write an inventory of everything in the property and its condition – take photos of the walls and floors in case you need to argue for damages when the tenants move out. It’s also worth considering providing your tenants with a house pack when they move in, with information like the recycling schedule and how to operate the central heating, as this information can be new to them and you may be able to avoid unnecessary repairs this way.
Renting a property to students can be a lucrative business, but you must take care that you are doing it legally. A lot of universities now have a landlord ‘blacklist’ and won’t allow their students to rent to landlords who don’t operate within the law, but they do reward landlords who look after students.
Leila Jones is a content writer for First Lighting. She attended Sheffield Hallam University and lived in halls for two years before moving into a seven bedroom house in her final year.