Renting to students can be a lucrative investment strategy for rentals. However, there are a few idiosyncrasies you need to know...
Understandably renting to students makes people a little bit nervous. There is a certain stereotype that comes with students. In a word: messy.
We have all been in a student house which looked like it was a scene from an Avengers battle. This would be off-putting to even the most hardened of landlords. Yet, there is a big market for student housing and if managed properly student housing can be lucrative. Buying, furnishing, and letting a property to students offers a consistent income and readily available clients actively seeking quality accommodation.
If you are considering renting to students, however, it is worth noting that this style of rental comes with a few quirks and additional responsibilities.
The answer to this depends on the style of rental you choose. If you plan to rent to a group of students who are all sharing the facilities of the property– you may require an HMO licence which stands for ‘House in Multiple Occupation’.
A House in Multiple Occupance (HMO) is categorised as a property that has three or more unrelated tenants all sharing a kitchen, bathroom and communal area.
If your property is probably a HMO if:
If the property is an HMO then you will need to get an HMO licence. These cost around £500 depending on where you are in the country and will usually last for around 5 years.
Check with your local authority, however, as some councils require you to get an HMO licence regardless of the number of students you house.
Apply for yours online at gov.uk website.
If you wish to house students there are a few extra steps to take beforehand. Your local authority will issue a set of guidelines that you must carry out.
These will include things like getting your gas and electrical safety checks done routinely but also things like determining there is an appropriate fire escape route, fire and carbon monoxide detectors on every floor, and all furnishings are fire safety compliant. Plus you need to provide a fire blanket or extinguisher if your property has more than 5 students.
Student tenants tend to care less about maintaining the property than older long term tenants. This means that your property will likely suffer more wear and tear when let to students. As a result, you may end up spending far more on maintenance at the end of a tenancy than you would with a traditional let.
In addition, students often have slightly different expectations from both the property such as needing a fully furnished property and their landlord as well.
Students will expect and require any properties they rent to come fully furnished.
There are exact guidelines that you will need to follow, but to give you an idea, you will need to supply:
There are other optional things you can supply like a T.V. in every room which could allow you to increase rent for your property.
When it comes to picking out furnishings you will want to go for mid-range sturdy and reasonably priced furniture. Furnishings will likely see increased wear and tear from student use so anything that is too low quality will likely end up need replacing frequently – which could end up being an extensive annual cost. On the other hand, anything too expensive could equally cost you.
So aim for sturdy, durable, and reasonably inexpensive to replace. On a final note, each bedroom must have a Yale/key lock on the door to ensure privacy.
Landlords for student accommodation are responsible for more than landlords that rent to single households. Firstly, there are stricter safety regulations in regards to fire, gas and electricity.
You must make sure that all fire safety checks are in place and checked regularly, and that escape access is not obstructed.
You are also responsible for keeping the communal areas of the property well maintained. Many landlords employ a local cleaner to do a fortnightly clean of communal areas. This ensures compliance with regulation but also has the added benefit of helping maintain the property which will save money down the line.
Students will also expect good internet and often landlords include their utilities in the rent. This makes everything easier for the household. If you do go this route think about installing a smart thermostat so that you can maintain control of the energy and save money on the bills.
Talk to prospective tenants about what they expect and agree upfront before the contracts are signed.
As most students are coming straight from living at home and won’t have full-time work it’s important to get a co-signer on the lease. You should reference the co-signer and ensure that payments can and will be made in full.
Have the tenants set up a direct debit to go into your bank account once a month, and make sure to quickly chase any late payments?
If you have a local college nearby, you can team up with their student accommodation team and they will find and reference tenants for you.
Students are notoriously strapped for cash, so you will want to employ a system like Landlord Studio that will easily allow you to track the income from your students and automatically chase up any tenants that are late with their payments. Not doing so could lead to late or missed payments.
With Landlord Studio you can link your bank account to view and reconcile transactions in real-time. Plus, you can set up automated rent reminder emails to go out a set number of days before the rent is due and rent overdue reminders if a tenant is late with a payment.
This depends on where you are in the country. However, often a property will make more profit rented to students than it would if it were rented to a single-family. The reason being you are renting individual rooms, renting fully furnished, and often including bills as well. This allows you to charge a premium. You are also assuming more risk due to the high turnover and the afore-mentioned messy reputation of students.
You will want to do your research to determine what the appropriate rental price for your area is for student housing.
Alongside your traditional advertising methods, most universities have an accommodation office that is dedicated to assisting students to find suitable accommodation. As such it’s a good idea to locate and contact this office to let them know you’ve got a property available for students. The university may have an accommodation list or website for students or may even advertise properties to students by email or through campus publications. Some institutions may also host housing fairs and accommodation events to aid students in their search.
You will want to make sure you investigate these internal university advertising and accommodation services. These will be one of the best ways of promoting your property to a hyper-relevant pool of tenants. Finally, be aware that you may be asked to register your property with the accommodation office and potentially pay a fee to do so.