Students are not exactly the pinnacle of society. Given at least three years off work after being released from mum and dad’s protective care, they are synonymous with heavy yet-to-be-controlled drinking and still need mum to clean their bedroom and pants.
So why the heck would you want to rent to these curious all grown-up now little darlings?
That’s the million-dollar question.
But hey, if you are aiming to build a million-dollar property portfolio – students always need somewhere to live. And student letting boasts some of the highest profits available when it comes to renting. So, let’s get into how students could be a great way to boost your portfolio and some top tips.
Why should I rent to students?
Imagine purchasing a large, somewhat shabby six-bedroom house with three receptions and three bathrooms for a bargain at an auction.
If you want to go down the route of renting as a family home, you’ll spend an absolute fortune trying to get this large home available for rent. After you’ve installed high-end fixtures and fittings, you could have a hard time hunting for a long-term tenant.
Any family that can afford this kind of rental is highly unlikely to be looking to rent for any length of time. They will only be looking for a rental property until they have completed selling and buying their new home. Or they are renting while on business in the UK for a few months. Or they are having some lengthy renovations to their permanent home. As soon as you have rented, you’ll be looking for tenants again in a few short months, and not being the ideal home for many, it’s likely to spend a long time being viewed but not rented.
Carve up that shabby house into a student home for 6 or 8, then you’ll soon be making excellent profits. The price of renting to a single student is on average £65 a week, which comes out as £280 a month and £3,400 a year. Multiply this all by six, and you are looking at a monthly rental of £1,680 and an annual rental of over £20,000. And if you were to base this on eight students, then a monthly rental of £2,200 and a yearly rent of almost £27,000, as there is no need to provide three reception rooms for students.
Students are often better at paying rent than you might think. Or should we say their parents are. It makes little sense for parents to hand money over to their kids to pay the rent. Typically, parents will set up a monthly standing order for the rent. So, it’s usual for rent to be paid without issue.
When students head to university for their first year, the university often provides them with university housing for the first year. But with limited accommodation, it’s second, third and fourth-year students are looking for rental properties. So, you could have a reasonably long-term tenancy.
And with student housing, the standard expectations of fixtures and fittings are just not on the same level as other lets. So sure, there may be wear and tear, but if it cost you next to nothing to furnish the house with second-hand shabby furniture, so you haven’t lost much if it needs to be replaced.
What are the disadvantages of renting to students?
Students are basically new adults, and they don’t own anything generally. Therefore, you need to furnish the property fully. But don’t go for anything more than the cheapest of the cheap of new items at IKEA. It’s perfectly acceptable and somewhat expected to furnish with second-hand furniture.
As we’ve mentioned, you should expect far more wear and tear. You also have the problem that if excessive damage has meant the fridge door is hanging off, the hoover is broken, and the communal carpets need replacing, how can you prove who is responsible and justly take specific student’s deposit money? But the fact you can rent for such a high amount, you should have cash in your bottom line to cover any inexpensive replacements.
Now we’ve covered the pros and cons of student renting, let’s look at some top tips for renting in this sector.
What type of property is suitable for students?
First of all, very few students have cars, so the property needs to be within a 30-minute walking distance to the main university.
The property is going to be at least three bedrooms to be able to make a good profit on multiple rents. If you are renting a smaller property such as three or four bedrooms, you’ll likely be renting to a small group of students that are friends. This means you are effectively only going to have to find one renter, even though it’s a group, and they’ll all need separate contracts. Also, a group of friends are hopefully more able to agree to pay bills and get on with each other.
If you have a large house, yes, your profits may be higher, but it has more chance of becoming a party house. Some students may become disgruntled and want to move out, and you may lose rent.
How to market your student let
You can market your property on the usual platforms such as Zoopla and Move On. It’s also best to contact the university and have the property approved by them. They will then put you on a list that is circulated to all students wanting to rent.
How to secure your monthly rent and protect your income
While several students work, it’s unlikely to be more than a part-time job at a local bar or restaurant. Students rely on loans and usually parents to foot their rental bills, as previously mentioned. If a student is passing on the rental responsibility to their parents, make sure you reference the person responsible for the rent payments. And that they are detailed as the guarantor on the tenancy agreement. That means in the event of unpaid bills that have been run-up or excessive damage; the guarantor is ultimately responsible.
Some students might be taking on the load themselves, in which case you need to reference them.
How to furnish your student property
We’ve already mentioned that second hand or cheap furniture is the way to go with student lets.
Here’s a basic list of what you need to provide:
- Carpets/curtains/lampshades
- Washing machine
- Fridge freezer
- Cooker
- Beds
- Wardrobes
- Desk and chair for each room
- Sofa
- Vacuum cleaner
- Bins
Legal Requirements
You need to make sure the boiler and gas appliances are certified safe by a registered engineer like any rent. You also need to comply with rules around Houses in Multiple Occupations (HMOs). Rules include:
- there are adequate cooking and washing facilities
- communal areas and shared facilities are clean and in good repair
- smoke detectors are installed
- electrics are checked every five years
- that the property is not overcrowded
Top Tips for Landlords Investing in Student Lets: Things to Remember
Student letting can be very profitable but make sure you follow these tips for success.
- As with all properties, think location, and you need to choose within 30 minutes walking from the main university.
- Protect your lets by referencing and obtaining guarantors for the rent.
- Make sure you comply with all the necessary rules for HMO’s.
- Fully furnish the property inexpensively and build additional wear and tear into your bottom line.
- Make sure you contact the university to get your property on their approved list.
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