Introduction
to Letting to Students - If you are looking to buy to let out
student accommodation or student
accommodation housing
then it is important you consider your students market carefully. It is likely you
will be in competition with the student halls of residence in the UK.
That said, there is an increased number of UK students nationwide demanding short term, off campus
student accommodation.....
There is often not enough on-campus accommodation
to cater for the
huge increase in the number of students now going to university. In the past,
this has forced students to seek local private student rental accommodation (increasing
demand for buy to let property / driving property prices higher). This trend is
likely to continue as the Government encourages students to go to university. In
2003, 33% of school leavers went on to some form degree or higher education; the
Government plans to increase this number to 50% over the next 10 years.
Cheaper student accommodation (shared or student
type housing) that will typically pay a higher rental yield. Be aware that these
properties will typically not appreciate in value as much compared to other
types of housing; so the type of property you purchase must reflect your
investment goals – income (whether immediate of future) or capital profit.
Students typically share accommodation in order
to reduce individual costs. Consequently, as a group of sharers students can
produce higher than average gross yields for landlords. Student sharers primary concern
is the use of the accommodation during term time and will dislike renting outside of
term time. If you cannot fill this void then consider short-term lets or foreign
students or work placements. Of all the “target groups” they are likely to be
the highest maintenance in terms of wear and tear on furniture and fittings –
this is mainly because they are young, have come straight from home and have not
been responsible for owning and caring for an accommodation before.
Wear and Tear - In addition, students will naturally create more
usage and wear and tear on the fittings and accidents and breakages will be more
frequent (compared to a professional couple for example). Students are much more
willing to accept a lower standard of furniture and fittings, for the
opportunity of lower rent (as a group). They will obviously require
accommodation as close to campus as possible and close the local amenities – bus
stops, train station, shops, launderette and not forgetting the pub!
The overall quality of the property need not be superb – there is no point
equipping it with a state of the art kitchen and bathrooms. Economy, cleanliness
and simplicity are key with students. Larger, older accommodation with as many
bedrooms as possible are ideal. Think about converting a spare lounge to a
bedroom to maximise the yield.
Mortgage lenders are a bit nervous about students
and some exclude students from the residential housing accommodation mortgage policies altogether. It is
advisable to have one tenancy agreement that states that if one of the group
leave, it is up to others to replace the shortfall by finding another flat mate.
In addition, when vetting prospective tenants, traditional credit referencing
does not apply as they are unlikely to have much of a work history – instead you
must ensure they provide a guarantor; someone who will be responsible for their
deposit and potential dilapidations to your letting accommodation.
References may be a problem – they are unlikely
to have an employment history, previous landlord or banking history. In this
case you should ask your prospective tenant for a guarantor – this is a person
that accepts financial and legal responsibility for the prospective tenant. This
heavy burden is usually placed on their parent’s shoulders or a close family
friend.......
