How to become a Successful Student Landlord
How to become a Successful Student Landlord
Being, or becoming a student landlord is no easy feat. Whether you’re a property veteran, or you’re completely new to the game, being a landlord comes with its ups and downs. 2020 has been crucial to the property market; impacted greatly by the coronavirus, it seemed that uncertainty was the common concern for this year. However, with new government legislations, students have begun flooding back into cities to begin their year of education. The Stamp Duty Tax holiday has commenced, encouraging a new wave of buyers into the industry, and so whether you’re looking to get your hands on some new houses, or are considering starting out, here is some helpful guidance and tips to consider before you do so.
We’ve been letting to students on behalf of landlords for over 20 years, and feel we have come to understand students pretty well. We know the best locations for student properties, what students look for, and what you can expect as a student landlord. And we’re ready to impart some of that wisdom onto you.
Why be a student landlord?
Letting a student property can be extremely lucrative. In the UK, the student letting industry continues to grow year upon year. Students can be a great option for numerous reasons:
- They are a keen audience. Students need somewhere to live. Unlike standard residential tenants who can afford to be a little pickier, students don’t often have many options. When it comes to time, they’re on the clock and need to find somewhere to live before their academic year begins. The market is so huge (and continuously growing) that you should be with no shortage of potential tenants each year, even with Coronavirus knocking about.
- Gain revenue per person. When you rent to students, you charge pppw. By charging per person, your average yield is a great deal higher with the average student rent for one household sitting comfortably in the £900- £1000 per month range. This is why student lettings are so popular, as they can be so much more lucrative than standard residential.
- Termly Payments. Students receive a loan once every semester. Thus meaning that they will have a reliable source of income every few months. They therefore should be reliable paying their rent on time. This payment is completed in advance for the year.
- Advanced Letting. Usually students confirm their tenancy just under a year in advance. This method of advanced letting secures you (the landlord) with an 18month+ income well in advance. So you can relax in assurance that your next year and a half property returns are secure.
- No Void Periods. Because student houses are in such high demand, you’ll find that the vacant period between tenancies is extremely small/ non existent. Often, we may have a few days between tenancies for our client’s properties. During this time, it’s a mad rush to get the property cleaned and ready for the next tenants. Shorter vacancy= more money.
- They’re not too picky. Students tend not to be overly picky about how fancy their boiler is, or how new the sofas are. This usually means that they can be a lot hastier in signing a contract than the likes of a young professional for example. That being said, make sure to respect your tenants. If you provide a home of good standard, then it will reduce the number of maintenance issues during the tenancy; saving you money, stress and time.
Sounds too good to be true, right? Correct. Student lettings can be a great source of income, but typically are not without their headaches.
The scary facts about student lettings
Truth be told, some students can be truly destructive. They can cost you thousands in damage, repairs, and cleaning bills after every tenancy, if you’re not careful. Handled correctly however, we believe that there is no reason for you to have the aforementioned issues with your tenants. So long as you have the correct policies in place and are mutually respectful with your tenants, there is no reason for them to purposely try to destroy your livelihood. Here is what we would recommend to be a successful student landlord with minimal headaches:
- Damage, breakages and more damage. Students are notorious for alcohol fuelled destructive behaviour. We’ve seen this year upon year throughout our client’s houses. It is painful, but don’t let it put you off the industry. Provided you have the correct policies and protection in place, there is no reason that you shouldn’t be able to claim back for any damage. Ensure that you have a high quality contract in place, or a highly qualified student letting agency working on your behalf. In this case, it is their job to remove your headaches so do ensure they deal with issues like this properly and efficiently. We offer affordable Full Management packages to our landlords which offer said protection and a great deal more. To read more about our offers, simply click here.
- Increasing competition. Each year, more and more landlords are discovering this lucrative market. This means that you may struggle to rent out your property, or find tenants for every room within a house. This is becoming increasingly common as competition begins to sky rocket. Online advertising can be a major tool in combating this increasing competition, putting you directly in front of tech-savvy potential tenants. But where to start? Google Ads, Property Showcase Websites, Social Ads, Social ambassadors, Referral schemes the list goes on. It can be scary, but each and every one of these options are relatively easy to learn, though they will take a chunk of your time in doing so. If you don’t particularly want to go down this route, then maybe look into hiring a student accommodation company to do it for you for a reduced price.
- Guarantor needed. Many student letting companies now offer students a “no deposit scheme” whereby they needn’t pay a deposit when signing a new contract. Instead, they provide a guarantor (usually a parent). Typically, this doesn’t come with too many issues, however when students refuse to pay rent, it can be a little tricky meandering around the parents. Ensure that you have a foolproof contract and a resilient spine and you should be fine.
- Students drop out or Coronavirus sends them home. This year especially, has provided a new wave of issues for student landlords. Due to recent circumstances in relation to Coronavirus, many students had to rapidly return home, drop out of their courses, or leave their student houses with no notice. Some of our landlords could afford to be extremely lenient in these situations, however for those who could not, this did pose unexpected issues. Hopefully, we won’t have a pandemic like this again, but be aware that numerous situations can evolve whereby student tenants disappear off the radar and this can always pose a slightly risky situation to renting.
What to look for in a property
Student properties can come in any shape or form. They don’t necessarily need to be a huge house with multiple bathrooms and two kitchens. We have seen houses which don’t lend themselves structurally to a student home become some of our most popular rentals with a little work and a few changes. When first viewing a potential property, we recommend looking out for a few important key factors:
- Transport Links. We have some stunning new builds in the centre of town. But what good are they if students have no transport links to University? Great for a night out, not so much for education. Consider how your students will be commuting to their place of education. Whether your area has great cycle lanes, regular buses or train stations nearby which will take them close enough to University.
- Safety. Students aren’t the pickiest but do consider how attractive a student may look to a burglar. Consider where you’re buying and avoid cheap house prices if it means you’ll be dealing with phone calls surrounding break ins for years to come. It is worth noting that students often prefer to live within an existing student area too.
- Supermarkets. No, pricey waitrose is no help at all. Students are looking to be in close proximity to an ASDA, LIDL, ALDI, or at a push, Tesco. If the nearest supermarket is a 10 minute drive, then odds are it may just put off many a potential tenant.
- Proximity to Uni. Like mentioned above, minimal travel times and ease of transport is crucial.
- Structural Potential. This may seem obvious, but you would be surprised how many landlords overlook a simple renovation which could increase their revenue by thousands every year. If the property has large bedrooms, great, but would they be better converted into ensuites? Or multiple bedrooms for maximum return? Mull over the blueprints and don’t shy away from a small investment in a renovation which will pay you back for years to come.
- Gentrification. This is the process of renovating and improving a house or district so that it conforms to middle-class taste. Areas which undergo gentrification, often began as student areas. As more and more landlords begin to renovate and improve the housing, the area’s value increases. This can take years, and doesn’t always happen, but if it does you could be sat in a very favourable situation. Home owner of a large house in a high-value area. Take a look at nearby renovations, crime rates, amenities and talk to other landlords to try and make a good prediction for the future. Pop us an email using firstname.lastname@example.org and we can get you added to our mailing list for monthly market updates and insights.
Let’s talk money
Long gone are the days where you could cram ten students into one property with one bathroom and one kitchen. New HMO regulations have increased the red tape involved in letting houses of multiple occupation. Nowadays, if 3+ tenants from more than one household occupy a property with shared kitchen and bathroom facilities, then it counts as a HMO. This means a landlord license may be required, and you can expect to pay around £500 or more for this.
- Landlord Licenses: If required, can be upwards of £500.
- Marketing Fees: Depending on where and how you plan to market your property, these fees can range from £50 to hundreds. Don’t be daunted by this number; if you are investing hundreds of pounds into your marketing, then odds are that your returns will benefit from this greatly.
- Luxury Refurbishments: Students aren’t what they used to be. Now, they expect modern kitchens, stylish decor, central heating and fast broadband speeds. This can sum up to a hefty bill if you’re purchasing an older property. Make sure to factor this into your costing before you go buying cheaper properties on a whim.
- Damages/ wear and tear: Every new tenancy, you can expect wear and tear. Sadly, you will have the occasional serious bit of damage too. Make sure to have your solid contracts in place and look at employing a local student accommodation service to deal with issues like these so you don’t have to. They should have policies in place which guarantee to get your money back to you, no questions asked. If you’d be interested in our services, we have collected 100% rent for each and every one of our landlords. For more info click here.
- Cleaning Costs after each tenancy: This is absolutely necessary. No tenant, no matter how tidy leaves the house clean enough for the next tenant. Factor in a clean for each property after each tenancy. This will cost you upwards of £85 depending on where you’re based in the UK and the size of the property/ sq ft.
The journey to becoming a successful student landlord is most definitely not without its hiccups, but can be extremely worthwhile as a business, side hustle or hobby. You choose. Did you enjoy this blog post? We will be reporting on the student property market once every month via our blogs, so make sure to subscribe to our mailing list so you don’t miss a thing. Bitesize info straight to your inbox.
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Hope it helps,