Reasons to become a student landlord
To many, the role of a student landlord would appear to be almost recession-proof, even to the point of being aided by it: when the recession first hit the UK in 2008, and with the prospect of mass unemployment looming, many Britons took the opportunity of applying to a university course to gain the qualifications that, it was hoped, would increase their chances of finding or keeping a job. Indeed, according to Knight Frank, the number of full and part time students in the UK at any one time has been increasing steadily for the past decade or so, rising from 1.8 million in 1997 to 2.5 million in 2007. The forecast is for the 3 million mark to be passed by 2014. All in all, over 57,000 more people applied for a degree course in 2009 than the previous year, and many students will logically require accommodation every year in the city of their chosen university, even if they choose halls for their first year.
Indeed, the student letting market has continued to thrive in direct opposition to the travails of the rest of the economy: according to Knight Frank, London alone requires another 100,000 student bedrooms than it has at present to successfully meet rising demand. Trends to watch include the continuing increase in the number of overseas students proportional to ‘home’ students. This is relevant to landlords as postgraduate and foreign students both tend to prefer private housing purpose-built for students over shared residences. International students are forecast to grow in number from 15% of the total student population in 2008 to 21% eight years from now.
However, the state of the UK student letting market, and with it the amount of rent that you can expect, varies considerably depending on the locality. Some British cities are actually more than well serviced with accommodation for students. Examples include Leeds, despite its two universities and several other colleges providing higher education courses, as well as some parts of Manchester. When considering where to purchase your own property for renting to students, it is helpful to make yourself aware, through local planners, of any purpose built student accommodation that may be being built (or planning to be built) by universities or private developers, as although they tend to be on the more premium side, they have also increased in number in recent years.
Nonetheless, students themselves can make particularly good tenants for several reasons. For one thing, they are not usually as demanding as other groups, with younger undergraduates in particular tending to be more forgiving of dated-looking bathroom interiors or garishly coloured kitchens. Nonetheless, standards are still important, and are rapidly becoming all the more so with the emergence of more purpose built student housing, as well as the increase in the number of the traditionally fussier groups of mature, postgraduate and foreign students. Another benefit of students is that they sometimes pay rent in advance of each term, and may have parents as guarantors, helping provide a bit of financial peace of mind as well as the money at an early stage to put towards costs such as mortgage repayments. Being bright, students, in theory at least, may make solving problems with their tenancies consistently easier than is the case with some types of non-student tenant. Last but not least, the trend of so many student tenants sharing one property allows you to maximise your return.
Student letting is a highly specialist part of the rental property market, with a need for relevant skills, experience and knowledge, so it is important to do your research before entering. There are several obvious quandaries for newcomers into the student letting market, including whether your property qualifies as a HMO (house in multiple occupation). Rental properties can only be classed as a HMO if they have five or more occupants, so newcomers are advised to let fewer than this number. If it was to qualify, you would need to obtain a HMO license from your local authority, for which you would need your property to comply with often very pricey (to the tune of tens of thousands of pounds) fire and accommodation standards regulations. Student properties also need to be more supervised and managed than traditional buy-to-let properties, given their comparatively high turnover of tenants. You will also be required to furnish your property so that it passes muster with the university’s student accommodation office, and therefore appears on the lists of properties that are handed out to numerous accommodation-seeking students each year.
It also pays to be aware of the needs of different types of student. Similar in their needs to professionals, postgraduate renters tend to crave a place of solitude in which to work, while younger undergraduates are more likely to look for larger properties that they can share with other students and that are in close vicinity to city centre bars, pubs and other popular centres of entertainment. Quite often vital for both groups are nearby shops and good public transport links, as well as, of course, close proximity to the university.
You should also try to find the best landlord insurance for your property. Whether you are a student landlord or own commercial, overseas, unoccupied and/or any other kind of property, find the right quote.
