It’s no secret that student tenants get a bad rap. Complaints about loud parties, destroyed furniture and week-old pizza boxes abound. So much so that apparently seven out of 10 landlords won’t rent to students for fear of damages to their properties.
But by shunning the student rental market, the majority are landlords are losing out on a lucrative market.
For starters, the stereotype of the irresponsible and lazy student isn’t really fair; with rising tuition fees and living costs taking a hearty chunk out of their wallets, today’s students are more conscientious than ever.
Buy-to-let properties in university towns also reportedly provide some of the highest yields in the country, making for a reliable source of income year on academic year. What’s more, it’s common for students to agree on a tenancy up to six months in advance, thereby reducing the risk of void periods.
Ready to take on the student rental market? Here’s what you need to know before you start letting to students…
Properties that appeal to student tenants
Firstly, consider what kind of property is best to invest in to attract student tenants.
Unsurprisingly, students generally want to rent a home close to their university campus, local amenities and transport links. It’s also wise to invest in a property within a known student area, as your tenants will want the ease of living close to their friends.
Large homes are attractive to student tenants, who want to rent in big groups. So if you’re letting to students, you’ll want to look for properties with three or more bedrooms, and ideally with large communal spaces.
But students often prioritise cheap rent over creature comforts; they’ll be more willing to accept box rooms, basic decor and ugly bedroom views than your average tenant, just so they can save cash.
This also means that you can look forward to higher rental yield, since you’ll likely be able to fit more tenants into a property if you’re letting to students than if you were to let to a family.
Does your student property qualify as an HMO?
If you’re letting to a group of students, your property will probably be classed a House in Multiple Occupation (HMO). It can get a bit complicated, but essentially an HMO is a house that is rented out by three or more people who are not part of a single household and who share facilities like a bathroom or kitchen.
If you’re letting to three or four people who don’t belong to a single household, then it’s up to your Local Authority’s discretion whether you need a HMO licence. However, once there are five or more people sharing the house, a licence becomes mandatory.
A licence will set you back £500-£600, depending on where in the country your property is located, and will last five years. It can take several months to attain a licence so be sure to apply in good time.
In addition, as of October 2018, there are new rules regarding minimum bedroom sizes for new HMO licence applications. These are now:
- 4.64 m² for one child under 10 years of age
- 6.51 m² for one person over 10 years of age
- 10.22 m² for two people over 10 years of age
- Any part of a room where the ceiling height is less than 1.5m is not considered as usable floor space.
Of course, you won’t be renting out to under 10-year-olds, but do bear these regulations in mind if you wish to let a house to university students.
HMO landlords should also note that there are additional responsibilities if you rent to multiple occupants. This is largely to reduce the risk of fire and to ensure that your tenants have adequate facilities, such as carrying out annual gas safety checks, providing fire extinguishers and fixing any blocked ventilators.
Types of tenancy agreements
The most common type of tenancy you’ll have when letting to students is an assured shorthold tenancy, which essentially means that you don’t share the accomodation with your tenants.
There are then two main types of contracts that you may wish to pursue to set out your rights and responsibilities as landlord and tenant: a joint tenancy or a sole tenancy.
It’s generally preferable when letting to students to opt for a joint tenancy. This is because all tenants sign a single contract and are collectively responsible for all costs; if one tenant leaves midway through the contract or doesn’t pay their rent, the others must find a replacement housemate or make up for the missed rent.
This makes your life easier as you can leave your tenants to resolve any disputes amongst themselves.
Sole tenancy agreements, on the other hand, mean that each tenant signs their own contract; they’re only responsible for the room they rent out and are not liable for any of the other tenants in the house.
You can give yourself peace of mind that your student tenants can meet the obligations set out in the tenancy agreement by getting them to name a guarantor. This will usually be a parent who can be relied upon to make up for any rent arrears or damages that cost more than the total value of the deposit.
Taking inventories and deposits
Wear and tear is to be expected when letting to students – and don’t be surprised if your property sees more wear and tear than if you let to a family! But you are entitled to charge for excessive damage, missing items and cleaning costs.
This is why it’s important that you draw up an inventory and take a deposit before your tenants move in.
For the inventory, check the condition of the property and all of its contents – from walls and ceilings to furniture and appliances – and have your tenants sign that they agree. As for the deposit, it’s common to charge four to six weeks worth of rent.
Then once the tenants come to move out at the end of the school year, check the state of all listed items again and deduct from the deposit as necessary.
Since 2007, landlords have been legally required to protect deposits for assured shorthold tenancies in a government-authorised tenancy deposit scheme. The deposit must be entered into a protection scheme within 30 days of payment, or by the start of the tenancy (whichever comes first). It will then be protected by a third party in the event of any disputes.
And finally… Marketing your property to student renters
Putting down a deposit on their first rental home is likely to be the most money that your student tenants have ever handled. So they’ll be understandably keen to find a landlord who has a good reputation.
Universities and student unions often provide lists of approved rental properties to their students or allow reputable landlords to advertise on specialist student portals.
Gain a competitive advantage over other landlords in the area by joining an accreditation scheme with the local university. This means that student renters can be comfortable in the knowledge that your property is safe, secure and well-managed.