Letting to Students

Landlords have been letting to students for many, many years.

Many large portfolio landlords began as student landlords, buying an investment property and letting it out to groups of students on a room by room basis.

The question for many parents of students looking to go to university this year or other property investors and landlords is should I join the ranks of student landlords? There is no doubt that the student letting market continues to grow and has resulted in record numbers of students applying to enter higher education. Growth has been driven in the main by domestic UK undergraduate demand. However, there is a trend towards rising numbers of foreign student, with participation of overseas students at UK universities rising 67% over the past decade.

More tenants = More Income! Letting to students is a very niche part of the private lettings market requiring particular skills and approach. It’s more complex and potentially involves the landlord complying with a greater deal of regulation than a standard buy-to-let. This is because many student lets will be classed as a house in multiple occupation (HMO). Landlords letting certain types of HMOs are now required to be licensed by their local authority. In order to obtain an HMO licence landlords will have to meet certain fire standards and accommodation standards that can be expensive to comply with.

Therefore, for many first-time landlords they should avoid investing in a property that is a potential HMO. The easiest way around this is to ensure that they only let their property to 4 or less student tenants as a rental property can only be classified as a HMO if let to 5 or more tenants. In addition, many student lets require a greater amount of supervision and management input. This is because student properties have a greater turnover of tenants than many buy-to-let properties occupied by professional tenants. Also, many student lets will be required to be furnished. The level of furnishing is often specified by the university and landlords will need to comply with standards set out by the student accommodation office in order to be featured on the universities accommodation list circulated to many students looking for accommodation. A much Higher Return!

However, students can make good tenants and here’s why:

A student landlord can fit more student tenants into a property. A 3 bedroom house will frequently accommodate 4 sharers – and that’s without letting the cupboard! This is more intensive than a let to a single tenant or even a house of professional sharers which can have a potential benefit on the investment yields.

Students have tended not to be as fussy as professional tenants. Students are more prepared to put up with slightly outdated kitchens and colourful bathroom suites than design conscious professional tenants. However, landlords shouldn’t be complacent; with the advent of more and more private halls standards are rising and mature and foreign students often demand professional levels of accommodation.

Some student tenants, or more accurately their parents will often pay upfront for each term.

For more information on student accommodation in Derby, contact our team on 01332 300170.