Renting to Students: Tips and Tricks for the Uninitiated
In 2019, the student accommodation sector is predicted to reach over £53 billion. Even during the uncertainty of Brexit, investors are keen on purpose-built student accommodation as higher education continues to be a popular choice for students from both the UK and abroad.
But, renting to students is very different from private rentals. The market can be lucrative but highly competitive. In this article, we outline essential factors to consider when renting to students and what to expect.
*Disclaimer: Logican creates intelligent business software for property portfolios. For legal advice about renting to students, please consult a lawyer. This guide is intended to offer an overview of the sector, and basic information about renting to students.
For many students, it could be the first time they’ve lived in rented accommodation. This means it’s essential to take the time to outline what you expect. You should answer all of their questions and address any concerns from the outset. Here are just a few initial expectations to inform your student tenants.
The contract should state when rent is due and whether the payment should be made by all tenants simultaneously or by each tenant separately. If the rent does include bills and utilities, make this clear. The same applies if your tenants need to pay for utilities directly to the relevant suppliers.
Who Is Their Primary Point of Contact?
If something goes wrong or in case of an emergency, tenants will need to know who to contact. You can write this into the contract, but it’s also a good idea to have the relevant phone numbers easily accessible for when issues occur. One such way to do this is to have a notice board within the property with this information on.
House Terms and Rules
Always include the house rules and terms and conditions in the tenancy agreement. You can add the essential rules and information on the noticeboard as well. This information can include things such as when the bins are collected, electricity and gas information and expectations of behaviour.
Students may need support during their tenancy and being an understanding landlord can help your reputation. Offering support and being on hand to help tenants can improve their perception of you. This, in turn, increases the likelihood of them recommending your accommodation to future tenants and could help you secure your next set of renters when they move out. Word of mouth reviews can be compelling among students.
Make Sure Your Accommodation Matches What Students Are Looking For
Renting to students means providing some fundamental household goods that other accommodation may not offer. Wifi, for example, is necessary for every student. Installing this automatically and having it set up for when tenants arrive can show you are willing to help and is great for reputation. As well as wifi, consider the following essentials that students will be looking for.
Most students won’t have furniture so providing this is a must. In every student room, you will need to provide a bed, wardrobe, desk and some shelves or somewhere to store books. Buying sturdy, long-lasting furniture is beneficial. It’s important to note that students will also usually require plenty of plug socks and ideally, more than one bathroom.
Location can be everything for students. Some University campuses are in one place while others are spread out across the city. Is your accommodation accessible? Having accommodation within walking distance or near public transport to the University is critical as many students will not have a car. Does your accommodation fit these criteria? If not, it might not be suitable.
Be Prepared for Higher Rates of Wear and Tear
Carpets and other pieces of furniture may have a lot of wear and tear during the students’ occupation. This is why it’s best to invest in something of better quality — or you may end up replacing it annually, and this can be costly.
Specific Considerations When Renting to Students
As noted, renting to students is slightly different from other types of tenancy agreements. Here are the considerations and essential information you need to know.
Houses in Multiple Occupation (HMO)
Houses in Multiple Occupation (HMO) are properties that have more than three people living there who share a kitchen, bathroom and communal living area but are not from the same household. Most student houses are classified as HMO.
Properties that have a minimum of three stories or have five or more occupants are called a large HMO, and you will need a licence from the council. To obtain this, you will need to show the council that the property has specific standards and meets certain requirements.
Some councils may want you to have a licence for a regular HMO, not just large HMOs. The cost of a licence varies but can be approximately £500 to £600. Check with your local authority for more details.
For student properties, you have two choices: joint or individual tenancy agreements. A joint tenancy agreement means all of the students are responsible for payment of the rent and bills. If one tenant should leave, it’s the responsibility of the other tenants to find a replacement and pay the individual’s rent and utilities until this occurs.
Individual tenancy agreements mean that you can write individual agreements for each person living in the property. Individual contracts are useful if one person decides to leave the property as you can find another and give them a new contract. They are also suitable if the tenants do not know one another.
Another essential factor of the tenancy agreement is to have a guarantor. Some students won’t have a regular income so having a guarantor for each tenant is critical. Most often this will be a parent or guardian.
Students are exempt from paying council tax and will need to get a certificate from the council for this by proving their student status. If, however, the council asks you as the landlord at a later date for proof, you will need to supply this.
When buying landlord insurance, you must state that you are renting to students. It’s important to remind students that they will also need insurance for their possessions within the property.
Benefits of Renting to Students
Renting to students does have many benefits and can be a lucrative market to enter.
Students Can Be More Profitable
Generally, a landlord can make more profit by renting to students than to a family or household renting a property. Your profit, however, will depend on where your location in the country.
Consistently High Demand in Specific Areas
Students will keep moving to cities for University. This constant demand means you will continually have students wanting your accommodation. According to research by TotallyMoney, university cities such as Liverpool and Nottingham are the best for buy-to-let landlords.
Negatives of Renting to Students
Naturally, renting to students also has some downsides.
Expectation That the House Will Be Fully Furnished
Students will expect a furnished house. Not having the essential white goods and appropriate furniture in each bedroom could be detrimental. It’s always worth investing in these before renting out your property.
Vacancy Rates May Increase during Term Breaks
During the summer, the chance of your property being unoccupied is higher. This is why maintaining a good relationship with tenants is beneficial as they may sign up for another year. If so, you can continue the contract, and they may stay during the summer if necessary.
Final Thoughts on Renting to Students
Before renting to students, always find out the full terms and conditions of HMOs from your local council. The size of the house and location can make a big difference to profitability — but, if you are prepared to put in the work and provide quality accommodation and furniture as well as keeping on top of regular checks, renting to students can produce excellent yields.
Logican’s property management software is ideal for landlords renting to students. Request a free demo from Logican to find out how it can help you manage your properties.