Should I Rent My Property To Students?
Every year up and down the UK, thousands of students flock to new cities that they may have never ventured to before, to embark upon a brand new journey and chapter in their lives: university life! Partying and studying combined, a key part of the experience for so many post-college or sixth form students is moving homes – renting accommodation in a typically cool, vibrant and fun area they have never lived in before with friends and experiencing freedom like never before.
According to the National Student Accommodation Survey 2020, it was outlined that over half of students in the UK live in private accommodation, 27% lived in university accommodation (Halls) and only 12% were staying with their parents.
As a landlord, renting to students can be a lucrative and smart business decision. There are also a number of issues that come with renting to students, it has it’s pros and cons. Let’s dig deeper into the positive and negative points to consider when thinking about renting your investment properties to students.
What are the advantages?
There are some extremely strong advantages to working with students:
· Length of term – Students tend to rent for the duration of the academic year which is 12 months so you can rest easy for this period and not worry too much about voids or complications of long term contracts.
· Demand – If you own a property in a student area, you will never have trouble renting the property out. Liverpool is home to four fantastic universities, making it a great city to consider for student lets.
· High yield – Students often live in HMOs so you can rent on a room by room basis, maximising profits and meaning a higher cash flow than a basic Buy To Let.
· Less fuss – For many students, although it might be their first time renting, they are typically not too fussed about a state of the art property with designer interiors and the latest software and technology. As long as the property is refurbished to a good standard and includes everything they will need to live comfortable, many students are more concerned about being with their friends and living near campus.
· Repeat Business – Every year you are presented with a brand-new pool of potential tenants so there will always be a steady supply. The academic year typically runs from October to June or July. However, you will find that most students are happy to sign a 12-month contract.
What are the disadvantages?
Sounds good to us! Let’s take a look at the possible disadvantages of renting to students:
· Furnishings – While students can be low maintenance, the property must still be furnished. This includes all white goods as well as the maintenance of items like this which must be included in your numbers when you run them at the start
· Wear and Tear – Wear and tear seems to be much more common in a student property. Students are there for the year and then gone and sadly this can often show in the upkeep of the property. Of course – not all students are like this and many will look after the house as if it were their own. It is just important to remember that they are not long term tenants so their feelings towards the property might different from a long term family in a single let, for example.
· Purpose Build Student Accommodation – This is a real consideration and often a very real threat to traditional student neighbourhoods. According to Savills, the PBSA market was worth £3.9 billion in the UK in 2017 and this is only increasing each year. Many students are choosing these types of accommodation options often in the city centres right by campus, over a typical house share. They are often very glamourous and enticing with private parking, gyms and underfloor heating… however, they come with a price tag and while they are something to bear in mind, they are not for everyone.
· Guarantors – Guarantors will always be required for students as they often have no credit rating or history, so this is an extra precautionary step to consider.
· Financial Instability – Students have a reputation for being short for cash while they are studying. While many get their rent covered by grants and loans, the uncertainty of exactly where it might be coming from is often frightening and too risky for some landlords.
· Noise complaints & ant-social behaviour – A common complaint about many student tenants is that they like to party and cause noise disruption, and this is commonly done within their houses. This is compared to other demographics and tenant types and although it is not all students – like every point in this post – it is a reputation that is sadly stuck with students the world over. It is your job as the landlord to ensure you keep neighbour complaints to a minimal and make sure your property is surrounded by other student homes, so their neighbours are on the same page as them.
So... good or bad idea?
Students, like all tenant types, come with a variety of good and bad points, as discussed above. It will not always be easy being a student landlord, but it can be extremely profitable. If you have done your area research and are prepared legislatively as well as physically within the property itself, it might well be a great long-term strategy for your as a property investor.