If you’re a landlord considering letting to students, the sector will provide a steady income that is normally immune to economic shocks. Renting accommodation to students has been the highest-performing asset for landlords in recent years, according to statistics.
Gross rental yields for buy-to-let landlords average around 6% over a 12-month period but the student sector is more profitable, showing total returns, on average, of 9.95% in the same period, according to the CBRE Student Accommodation Index.
Before you begin, it’s important that you understand your market, as there are many advantages to letting to students. Do your homework, as there are some specific considerations to take into account for the student sector.
Why let to students?
There’s always a high demand for rental properties in student areas and it’s more profitable than traditional lets, offering high yields. Also, the demand is consistent – there will always be students needing somewhere to live.
Usually, students will need to rent accommodation for a minimum of 12 months – leading to less stress for the landlord in finding new tenants, as there’s time to get organised.
The best time to market student property can differ, but usually, students begin searching for accommodation at any time from January onwards for rentals for the next academic year, which starts in August or September.
Best type of student accommodation?
The ideal student property will need a minimum of three bedrooms, and places such as the lounge and kitchen need to offer large, communal spaces, as these have particular appeal.
It’s also advisable to have more than one bathroom or toilet, especially if there are several students sharing, as this will be a major benefit when you’re marketing the property. A garden would also be a bonus.
Research shows that overseas students tend to prefer hotel-style studio apartments, so it’s important to know your market. The best location should ideally be within 30 minutes’ walking distance from the campus.
Market student lets in the same way you would market regular lets, such as online and through a local letting agent who has a relationship with the universities.
How would you protect your income?
It’s not easy to guarantee your rental income in the same way you might with regular tenants – as students normally come from living at home with their family, they can’t get a reference.
Consequently, you should make sure each student has a guarantor, normally a parent or guardian, as they won’t have a regular income of their own. The guarantor will be responsible for paying the rent in the event the student fails to do so.
Any disadvantages to student lets?
Landlords should consider there may be more wear and tear on the student property. This means it’s likely you’ll have to spend more money on maintenance costs at the end of the tenancy.
Also, as most students will be coming straight from living with their parents, they will expect the property to be fully furnished, as they won’t have any furniture of their own.
In addition, the landlord must take into account specific legislation for student lets. As you’re likely to be letting to a number of sharing occupants who aren’t a family group, you must comply with legislation for Houses in Multiple Occupations (HMOs).
In addition to the landlord’s usual legal responsibilities, you must make sure smoke detectors are installed and that you arrange a check of the electrics every five years.
Make sure that the property isn’t classed as overcrowded. This means there must be a separate bedroom for every single person aged over 21, for each couple and for every two young people who are over ten years old.
There must be adequate washing and cooking facilities and all shared facilities and communal areas should be kept clean and in a state of good repair.
What type of furniture is required?
Student tenants will expect a certain selection of furniture, as the property will commonly need to be fully furnished. The requirements normally include a fridge-freezer, washing machine, cooker, beds, sofa, a desk and chair in each room, wardrobes, curtains, carpets, lamp-shades, vacuum cleaner, bins and a lawn mower if there are grassed garden areas.
With more and more purpose-built accommodation popping up, it is all the more important to ensure your premises are of the highest standard.
Let Us Furnish provides a complete furniture solution for landlords, including those who are letting to students. For further information on our specialist packages for HMOs and student accommodation, contact us on freephone 0800 7819 427, or complete our handy online contact form.