A guide to letting property to students

POSTED: 25th April 2014
IN: Personal Guides

Letting to students can be a lucrative venture for property owners, but some people may be put off by the traditional image of this demographic - hedonistic partygoers who will show little respect or care for the home they are living in.

Letting to students can be a lucrative venture for property owners, but some people may be put off by the traditional image of this demographic - hedonistic partygoers who will show little respect or care for the home they are living in.  undefined

However, it is perfectly possible to find responsible, reliable student tenants who will look after the property, pay their rent on time and pose very few problems for the landlord.

A bit of advance planning and research will increase the likelihood of anyone considering letting to students having a stress-free, rewarding experience.

The value of the student market

A report released by the National Landlords Association (NLA) in September 2013 underlined the appeal of the student market.

Less than four in ten (38 per cent) landlords letting to students had experienced arrears in the year leading up to the study, while less than a third (30 per cent) had faced the problem of empty properties in recent months.

The research also found that student tenants and houses of multiple occupation offered rental yields of 6.7 per cent and seven per cent respectively, compared to the UK average of 6.1 per cent.

NLA chairman Carolyn Uphill said letting property to students requires hard work and investment of your time, but can also be very fulfilling.

"As with all tenancies, it's important to establish a good, professional relationship from the start," she advised.

"It is also essential that you set out fair terms in your tenancy agreement and that both landlord and tenant fully understand their obligations throughout the tenancy. If you get this right then the tenancy generally runs smoothly."

So once you have made the decision to enter this market, what can you do to increase your chances of success?

Choose the property and area carefully

If you are buying a home with the express intention of renting it out to students, it is imperative to select the property and location carefully.

The likelihood is that any prospective tenants will want to live in a relatively large group, so it is advisable to choose a house, flat or apartment with at least four bedrooms and plenty of space.

In terms of location, think about the priorities of the market you are targeting. Most students will want to live close to town centres and near their friends, so focus on areas that already have a strong student population.

Get university accreditation

One of the best ways of enhancing your visibility and appeal to the student market is getting on the local university or college's list of accredited landlords.

This is an important resource for students searching for a property to rent, so not being listed will put you at a disadvantage in a potentially competitive marketplace.

Get in contact with the university in your chosen area to find out how to get your name on the list of recommended landlords, which should be a relatively straightforward process.

Use a guarantor

In the interests of self-protection, it is important to use a guarantor - someone who can provide a guarantee of financial cover should any problems occur during the tenancy, such as non-payment of rent.

This is particularly important for the student market, as there is a high likelihood that your prospective tenants will not be able to provide any credit or employment references.

In most cases, the guarantor will be a parent or guardian. Make sure you get an address and contact details, so you are ready to act in the unlikely event that you do encounter any difficulties.

Keep your tenants informed

You can get your relationship with new tenants off to a good start by ensuring that they are fully informed about the property and their responsibilities when living there.

Compile an information pack to clarify details such as what is expected of the occupants regarding care of the property, rubbish collection days and practical points like the locations of fuse boxes and stopcocks.

You could also make your new tenants feel at home by letting them know about local amenities they are likely to find useful, such as shops, takeaways and pubs.

Regulations - do your research

Before going into the student lettings market, make sure you are fully aware of your legal responsibilities.

As the landlord, your obligations will include keeping the property free from health hazards, ensuring all gas and electrical equipment is safely installed and maintained, providing an Energy Performance Certificate and protecting tenant deposits in a government-approved scheme.

You should also find out whether your property is deemed a house in multiple occupation (HMO), a term that applies to homes accommodating several tenants who aren't members of the same family.

An HMO must have a licence if it is three or more storeys high and occupied by five or more people, and local council regulations could state that other types of HMO also require a licence.

As long as landlords entering the student lettings market are willing to put in a bit of hard work and maintain a diligent attitude, there is every chance their venture will prove rewarding and profitable.

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