Posted on: 26 September 2018

Are you missing out by dismissing a student let opportunity?

The property lettings market has always been quite lucrative for investors, whether you’re a commercial landlord, a residential landlord or own a block of flats. However recent legislation could mean it is less profitable in the buy to let market meaning landlords will need to find new ways to make money from their investments.

Changes to tax relief on buy to let mortgages came into effect in April 2017 meaning landlords will pay more tax on their income from a buy to let investment. Previously tax was only applied to profits made after mortgage interest and expenses. Over the next few years, mortgage tax relief on rental properties will decrease incrementally up to 2019-20, meaning that landlords will need to bring in a higher yield of income to make investing in property a sound idea.

With more and more students than ever before and the recent announcement that tuition fees could be reduced, student property could be the way forward for entrepreneurs attracted to the housing market.

What to consider when buying a student let property

Student properties can be a great investment for any landlord. Renting multiple rooms on an individual basis can produce a high yield of income, and while students may have a bit of a bad reputation in the buy to let industry, there are ways and means of ensuring you get the best out of your investment.

If you decide to dip your toe into this market, there are a few things you should consider when choosing your student property:

Location is essential with any property purchase. Consider:

  • Is it close to campus?
  • Are transport links readily accessible?
  • Does it have good connections into the town/city centre and local amenities?

Number of rooms will determine your income potential

  • 3 or 4 bedroom properties are generally easier to come by and easier to rent out and manage

Bathroom facilities that could make your property more attractive

  • One main bathroom will usually suffice although it is always beneficial to have a separate toilet as well

Maximising space to capitalise your income

  • Older properties generally offer bigger rooms with lots of accommodation for rental appeal but may require more maintenance
  • Communal living areas should be big enough to accommodate the number of potential students that will live there
  • Small kitchens in large properties can be off putting to prospective tenants
  • Outside space is advantageous but avoid properties with large gardens that will require a lot of maintenance
  • Parking is not essential but can be an added bonus
  • Neutral, painted walls with modern but basic fixtures and fittings can allow the students to personalise the space with their own belongings

Additional considerations to take into account

  • Your tenants may require individually lockable rooms for their private bedrooms
  • As student properties are considered to be houses of multiple occupancy  (HMO’s) there are strict rules when it comes to building regulations and fire safety that you will need to take into account if you are renovating a property. This could also mean that you need to include strict terms in your tenancy agreements regarding smoking, burning candles or incense, electrical heaters, overloading electrical sockets and ensuring food that is cooking is never left unattended

What are the advantages and disadvantages of renting to students?

Like any other lease opportunity, commercial or residential, there are benefits and risks involved with letting out your property to students. Neither argument outweighs the other but you should consider each side carefully prior to making your investment:

Advantages of a student let property investment:

  • Potential to generate higher income – typically more than a standard buy to let due to the number of rooms that you can rent on an individual basis (including a second reception room)
  • Accommodation can provide just the basics and doesn’t have to be fancy
  • High demand due to the increase in the number of students
  • Landlords can ask for rental income up front – typically a term or 6 months in advance
  • You’re not committed to long term tenancies

Disadvantages of a student let property investment:

  • Lower capital appreciation
  • Competition – new high rise blocks of flats dedicated to students reducing demand for private lettings
  • Potential for high costs in terms of maintenance and repair bills
  • Credit references are limited and guarantors might be needed
  • Summer holiday vacancies could leave your property empty and at risk - you will need to keep your student let property safe over summer
  • Attracting the right type of tenant – you could be liable for noisy and disruptive tenants if the neighbours complain

What furniture do I need to supply?

Given that most students will have only just flown the nest at the point of going to university, chances of them having furniture to fill your rental property with will be minimal.

To make your property more appealing to the student market there are some basics that you should provide. Click the button below to download a handy checklist to take shopping with you.

Download the checklist

Marketing your student let

Marketing your student let property should be done in much the same way as any other property. Advertising online and through agencies can help you reach a wide audience, but don’t forget that referrals can be a cost effective, advantageous opportunity.

Including photographs can help people visualise living in the space so it’s important to showcase the very best of your property and include detailed descriptions that include measurements and features.

Promote the qualities that would attract your target audience the most – for instance, cheap bills and cost efficiency can be particularly attractive to students.

Communicating with your local University

As a new landlord to the student scene what better place to advertise than at your local university? You can print your own adverts, pin them to campus notice boards and take advantage of a concentrated target audience. College bars and even campus laundrettes are great places to advertise.

Referrals

As a student landlord, referrals from current tenants can work in yours and your tenants favour as well as be beneficial for your bank balance. By offering an incentive to this year’s occupants, such as free rent for a week (don’t forget that students love a bargain), you could save money on advertising, get people that are known by your previous tenants, and let your current tenants do all the hard work promoting your property and showing round prospective tenants.

How to ensure you get paid

Many landlords of student lets request rent upfront. Whether it’s a term in advance (coinciding with student loan payment dates) or 6 months upfront, prepayment can help ensure you get paid ahead of your due date and before your tenants run out of money. This is not uncommon so won’t necessarily make your property unappealing in comparison to others.

Another common security feature of student lease agreements is to request a guarantor. Typically this would be a parent, guardian or family member and again this is very common in the student let market as students rarely have much credit history to report on.

What to do if a student moves out?

With an average of 1 in 10 students dropping out of university before their second year of study, there’s a high chance that at some point in your time as a student landlord one of your students may wish to vacate the property early. This is not uncommon and many other student landlords have been in the same boat.

But don’t forget, while some students may leave, others may find that living with the people they befriended the year before just isn’t working out. So there is a continuous cycle of students wanting to leave mid-year and other students seeking alternative accommodation. You can use this to your advantage if you find yourself with an empty room.

Protecting your investment

Finding the right insurance for your student property can be a challenge. You need cover that can protect your investment while your property is tenanted as well as when it’s empty and that’s where Premier BusinessCare can help.

Premier BusinessCare help many landlords arrange their student property insurance and can help you arrange a great value policy that gives you peace of mind and helps secure your investment.

You can compare quotes online from some of the UK’s leading insurers or call us for expert recommendations and advice for your student property insurance.


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The information and tools contained in this guide are of a general informational nature and should not be relied upon as being suitable for any specific set of circumstances. We have used reasonable endeavours to ensure the accuracy and completeness of the contents but the information and tools do not constitute professional advice and must not be relied upon as such. To the extent permitted by law, we do not accept responsibility for any loss which may arise from reliance on the information or tools in our Knowledge Centre.