With higher rental yields, higher demand and increased protection, renting to students sounds like it could be every landlord’s dream. However, the typical outlook and stereotypes forced on this rental demographic is arguably warranted, but that doesn’t meant the opportunity shouldn’t be so easily overlooked. For those looking to rent out their buy to let property to accommodation here we offer our tips on how to rent rooms to students.
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Opening your doors to students can be a sustainable and profitable operation for private landlords. After all, with millions of new students beginning their rental journey each year, as long as your rental property is in an prime location in regards to the university campus it could be a highly contested opportunity, netting you a larger pool of potential tenants each academic year. Arguably, this demand for rental opportunities in a central location for students, with transport links to the surrounding area will experience consistent demand irrespective of the larger economic climate.
Whilst this would typically cause apprehension for many rental property owners, the shorter tenancy periods experienced with tenants can be a blessing. Of course, tenant retention will always put a landlord on the right path towards financial security, but with increased likely hood of problem tenants, property owners will find their exposure to such renters will be far shorter, and perhaps stopped the problem from being exacerbated. However, this high tenant turnover, whilst not “ideal”, does give landlords an invaluable asset; predictability. This essential foresight allows landlords to know exactly when they will need to next advertise their rental accommodation, when to prepare, and again thanks to the turnover, a number of times to perfect this routine and fine-tune a rental operation.
Somewhat contradictory to the assumptions that come with short tenancy periods and a revolving door of tenants, landlord’s that choose to let out their property to students generally don’t experience as many void periods as other rental property owners. Of course, if there is no one to occupy the property, then there is no one to pay the rent, leaving the landlord missing vital income. However, this is not the case with student rentals as despite the shorter academic year, running from October to June, many tenants are happy to sign a 12 month lease.
Landlords that let to students typically report a far greater rental yield. With student accommodation usually taking the form of a house in multiple occupation, or HMO, property owners are able t charge rent by the room, giving them a much higher return on their investment. A report published in 2019 by Totallymoney revealed that buy to let properties performance in university cities can easily outperform that of the capitol; with rental yields exhibited in Nottingham and Liverpool both being over 10%, typically double that seen in London.
As discussed, there are many landlords that either exclusively let to students, or are happy to do so; however, even these rental property owners are not dismissive of why others chose not to. Similarly to requesting that the potential tenant obtains a guarantor, many landlords take precautionary measures to safeguard their investment. Landlords will often ask their tenants to provide rental payments before moving in, giving them the peace of mind that there will be no missing rent for an extended period of time, whilst reassuring the tenant that no large costs are forthcoming. Usually, rental property owners will ask their tenants to supply at least one months’ worth of rent before they move in. However, there is no legal limit on what they may request, with some tenants being happy to provide up to six months’ rent in advance, With this being said it is important to keep in mind that at this point the aim is still to attract student to your rental opportunity and by creating high upfront costs, many potential tenants may be put off and rent elsewhere.
Put simply, no not at all. Landlords in the UK enjoy the luxury of being able to tailor the exposure and marketing of their rental property to their desired demographic. If the property owner feels that the size and setting of their buy to let property would be more suitable for students then they are permitted to advertise the rental opportunity as such. It is important to not understate the importance of marketing your rental property effectively, with a rental on the outskirts of town, close to parks, schools and retail facilities being arguably more appealing to those seeking a family lifestyle. Alternatively, a city centre location that is suitably close to a university campus would make the ideal dwelling for students. With this in mind it is important to note that this is somewhat flexible and adaptations must be made. Over recent years private landlords are facing increased competition as larger, dedicated student accommodation is gaining command over the rental space; a move seeing opportune landlords also market their city centre properties to young professionals alongside students.
Landlords are however, prevented from refusing a tenancy based on certain personal traits. Implemented with the Equality Act 2010, these “protected characteristics” comprise age, gender, disability, marital status, race, nationality, sexual orientation, or religious alignment. If a landlord was to dismiss an application for a tenancy based on any of these, the discrimination would be considered unlawful. However, if a tenancy agreement doesn’t proceed because a tenant failed their affordability checks, has a sporadic employment history or a poor reference from a past landlord, then the rental property owner is well within their rights not to proceed and “lawfully discriminate” on these grounds.
With this in mind, it is also perfectly acceptable for a landlord to refuse a tenancy because the aspiring occupants are students. Concerns over a consistent income during full time education, anti-social behaviour and retuning the property in a poor condition are all historically founded arguments, but it is never fair, nor appropriate to tar everyone with the same brush and assume all students are the same. As outlined, being a student is not a “protected characteristic” and therefore provides ample grounds for a landlord to refuse a tenancy, however this doesn’t mean a compromise can’t be made. This would be a lot easier for students that have been in higher education for longer and perhaps have a few past tenancies behind them. In these instance it would be possible for a landlord to gain a greater understanding of the students renting aptitude, if they have respected previous accommodation and naturally, if they have ever encountered problems paying the rent. Of course, this will make a student far more favourable in the eyes of a rental property owner, but they are still under no obligation to accept the tenancy.
Despite the undeniable convenience in having a consistent pool of new tenants to attract to your rental, some landlords see renting to students as too big a risk, with the potential risk simply outweighing the gains to be made.
Whilst the student rental market lends itself to reduced tenancy lengths thanks to the shorter academic year, fears of extended void periods are typically dismissed with the introduction of a new pool of students in need of accommodation. However, this traditional reliance on the latest surge of students is becoming far less dependable as more opportune developers seek to cash in on the young demographic. For private landlords this means huge competition, with dedicated student halls and accommodation surfacing across the nation’s academic hubs, those that are not already well established in the area may find increased competition and fleeting demand for the rental property.
With this being said it is somewhat expected that a landlord that is offering renal accommodation to students ensures that the property is furnished. Typically students will not be moving in with much more than their personal belongings, in most cases they simply will not possess the required appliances and furniture and if they did, the renal period is too short to justify the logistics involved with furnishing their new home. However, whilst students will expect bedroom furniture, sofas and basic appliances, they are mostly not concerned with having the latest in contemporary taste, with simple furnishing being more than sufficient. Of course, the furnishing a property can be a costly start to a landlord’s rental journey, however, the furnishings used in student accommodation is often far cheaper than what would be expected in rental for a family, or even young professionals. This of course, lowers the initial financial barrier to getting the rental ready for occupants, and somewhat diminishes the impact of the high wear and tear synonymous with student lets.
When searching for the ideal tenant most landlords turn to the referencing process as the best way to weed out any occupants that could cause issues later down the line. With these referencing checks comprising a range of current income, and credit history checks it goes without saying that a major cause of apprehension for landlords is the uncertainty of a tenant consistently paying their rent.
Now for most students, moving into rented accommodation during their academic pursuits will be the first time they are living away from home, making references from previous landlords and an assessment of their credit history redundant. To this end, landlords that let to students will usually be reluctant to proceed with a tenancy agreement unless the occupant is able to produce a guarantor. A guarantor is usually a close friend or relative of the potential tenant, and in the instance that the current occupants of the property are unable to pay their rent, in an effort to prevent the accumulation of excessive rental arrears; the guarantor will be legally liable to pay the outstanding amount. Of course, it wouldn’t be an effective safeguarding measure if the guarantor themselves were unable to cover the cost of any missing rent, therefore they are also subject to similar referencing checks to evaluate their financial suitability for the role.
If however, the student rental is under a shared tenancy agreement the duty of the guarantor is adapted to suit the nuances of the agreement. As the tenancy is shared, the guarantor is no longer financially responsible for a single tenant, but rather, the rent in its entirety; meaning that as the obligation to pay the rent is shared amongst each of the occupants, the guarantor would bear the sole responsibility for the properties missing rent. With this being said the obligation of a guarantor can vary slightly between tenancy agreements, however, if a new agreement is established, the guarantor would no longer be legally bound to the original tenancy agreement.
Somewhat synonymous with students, the party mentality and loud noises are not the signs of a welcome neighbour. It is safe to say that these qualities are not exactly desirable by many landlords and the prospect of dealing with noise complaints and interference from the local authority are far from appealing.
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