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Letting to Students – And why we need private landlords in this sector
LETTING TO STUDENTS – AND WHY WE NEED PRIVATE LANDLORDS IN THIS SPACE
Many people believe that going to University is a right of passage and a chance for young people to venture out from the family home and, to a point, stand on their own two feet. Whilst the studying aspects and learning opportunities of being a student shouldn’t be overlooked, lets be honest, most people that have been to university look back on those years and reminisce most about the social aspects of this chapter in their lives.
For most students its the first time they leave the family home, and to live independently – and the life skills that come part and parcel with this experience shouldn’t be underestimated.
According to research from student accommodation platform, UniHomes, more and more of us are opting to go to university, meaning the demand for student accommodation is greater than it’s ever been.
Their research shows that the total number of students across the UK opting to pursue higher education has increased consistently since 2015 – and now nearly 200,000 more of us head to university each year. In 2015, university students accounted for 3.6% of the total UK population, but this has climbed year on year, with them now making up 3.8%.
Purpose-built student accommodation totals just 660,000 homes in total. And as a result, many students are reliant on the private rental sector to find a place to live while studying. However, as has been widely reported, a string of government legislative changes affecting landlords over recent years has also caused stock levels in the PRS sector to fall. There’s somewhere in the region of there are 107,000 less rental homes across the UK market when compared to the peak of 4.832m rental properties in 2016.
So what does this mean for students?
Some students of course choose to stay in student specific accommodation – and there has been an increase in the provision of this to try to keep up with demand, but the reduction in PRS stock is a worrying trend that could cause issues in the future.
As with any market, where demand exceeds supply, the consequence is upward pressure on prices and this isn’t good for students already on limited budgets. Phil Greaves, Co-Founder of UniHomes, says that “rental affordability is already an issue for many at university and the cost of renting is the largest outgoing that many students struggle to cover. Should stock levels continue to decline while demand increases, the cost of renting is likely to climb higher, causing rents to increase as well”.
Are Student Lets a good investment strategy?
Letting to students can be an excellent option for landlords. Once ‘in’ students will usually want to stay for a minimum of 12 months – and in many cases for the whole duration of their degree course. If you own property that is in easy reach of the campus – or on good transport links, demand in student areas is strong and consistent and student lets tend to offer good yields.
Having rented to students myself, I find that they generally make very good tenants. And if you take care with them, provide them with a safe, well equipped home, they too respect their surroundings and behave responsibly. The image of your student let property that you’ve bought with your hard earned cash being left in squalor isn’t an image most landlord would relish, but my experience is that students have come a long way since ‘The Young Ones’ stereotype.
You do of course have to remember that the property may well sit empty during the summer months whilst students return ‘home’ but this creates an ideal rental window for ongoing repairs and maintenance without the disruption usually associated with traditional buy to let.
Something to be aware of is that student tenants can be difficult to reference using the standard process, because they do not have a regular income and have usually come straight from living with parents. Instead, you should seek a guarantor for each student tenant. Usually a parent or guardian, the guarantor will themselves be referenced and is responsible for the rent if the tenant should fail to pay.
Which properties are suitable for students?
A property with a minimum of 3 bedrooms and large communal spaces (lounge and kitchen) will appeal particularly to students. More than one toilet or bathroom will be a great additional selling point, as will a garden or outdoor storage space. Choose a location within 30 minutes walking distance from the university campus or on good transport links.
According to UniHomes, the best student cities in the UK are: