Student rentals typically offer one of the highest yielding opportunities for buy-to-let landlords, earning an average rental return of 6.5% each year for those who get it right. From property licensing to regular inspections, student landlords need to be well-educated if they want to get top marks.
Location
Make sure the property is in a good location. Landlords also need to make sure their property is in one of the key student hotspots. Typically, these tend to be close to college and entertainment venues and landlords can trip up if they don’t understand the subtle nuances that elevate one street over another. Students nowadays like shiny bathrooms and kitchens, open plan kitchen-diners, double beds and, if possible, ensuite bathrooms and outside space. If a property doesn’t have these features, it’s not to say that it won’t rent but the landlord may need to adjust their expectations on income.
Property licensing
Landlords should always get in touch with their local council to find out if special licensing is required. Student properties are usually houses in multiple occupation (HMOs) – homes rented to at least three people comprising two or more households who share facilities.
Marketing
Landlords can go it alone with their marketing but it may help to join a student housing affiliation scheme to maximise demand. For example, student housing charity Unipol provides help and assistance to students renting in the private sector in Leeds, Nottingham and Bradford. Using the Unipol scheme, marketing to students starts in January for tenancies that will begin in September. To be included in an affiliation scheme, landlords may also need to gain accreditation and demonstrate they follow best practice in student housing. Using a letting agent In each market, there are usually a handful of letting agents that have in-depth experience of the student market and it can pay dividends to tap into their specialist knowledge. Landlords should look for an agent qualified with either the Association of Residential Letting Agents (ARLA), the National Association of Estate Agents (NAEA) or a member of the Royal Institute of Chartered Surveyors (RICS) to make sure they get good advice. As usual, landlords will need to decide whether to go for a ‘find only’ service or to add ‘ongoing management’ on top.
Tenant checks
Landlords will want to run a range of tenant checks before letting their property. These include an ID check and a ‘right to stay in the UK and rent’ check, evidence of each tenant’s financial circumstances, references and guarantor information. The ‘right to rent’ check became mandatory for landlords throughout England on 1 February 2016 and is especially important for landlords when dealing with overseas students.
Tenancy agreement
Student properties can be let under a joint tenancy or a series of individual tenancies (single room lets) and typically have either a 48 or 52 week duration. A joint tenancy means all tenants are jointly liable for any rent arrears or damage to the property. So, for example, if one tenant moves out, the landlord can pursue the remaining tenants (as well as the tenant who has left) for any monies due. In many cases, student landlords also ask for a guarantor, typically a parent who will step in to pay the rent if the student doesn’t.
Landlord insurance
Insurance is something all landlords should consider and landlords with mortgaged properties will need to have suitable insurance to satisfy their lender. Regular home insurance policies don’t provide all the cover landlords need and specialist residential landlord policies are therefore required. Focused policies are available for landlords letting to students but landlords should remember these won’t cover students’ possessions and remind tenants to arrange their own cover if they want protection.
Regular inspections and trouble-shooting
Many agents recommend an inspection each term to make sure everything is in order. It’s important to keep an eye on the condition of the property and deal with any issues promptly, especially where they might give rise to health and safety problems. For example, bikes in hallways can block potential fire escapes and more landlords are providing secure bike storage for this reason. Also, a busy laundry schedule without adequate ventilation might lead to damp problems if left unchecked.
Maintenance and refurbishment
Last but not least, student properties get a lot of wear and tear and landlords need to be prepared for regular maintenance. Deep cleaning is recommended between tenancies and regular painting is a good idea especially in heavy traffic areas. For more involved refurbishments, like a new kitchen or bathroom, it can be difficult to find a time that suits everyone but the long summer holidays are usually a good option. Alternatively, provided your tradesmen are lined up for a quick turnaround, there might be time over the Christmas break as the students won’t typically return until the third week in January.
The team at Hanna Properties are experienced in dealing with Student HMO’s and are happy to provide support, guidance and management of Student properties to offer our clients the benefits of higher returns without the additional challenges of managing these tenancies.