Student digs aren’t the most glamorous. Whereas professional couples reside in high spec apartments with lush carpets, sleek modern kitchens, and more mod cons that you can shake a bulging wallet at, student digs are known for lower rents, drab décor, dour drapes, lentils and flat-pack furniture.
But is this clichéd view of student lettings fair? Life has changed considerably since The Young Ones were terrorising neighbourhoods during the 1980s. Agents might have recoiled at the thought of Rik, Vivian, Neil, and Mike running amok in their landlords’ properties back then, but today’s students are a different bunch. And the market has changed quite a lot too.
Consequently, it’s about time we reopened the textbook on student lettings. In fact, there’s some expert tuition that agents can offer landlords about the advantages of targeting students below...
Unit 1 - Student properties are always desirable
Property investors dig student digs. Why? Because our higher education system is top of its class. Young people from around the world are queuing up to study in the UK. Demand for student lettings has never been higher.
There are 106 universities across the country and almost two and a half million students. And with a new crop of eager students arriving in university towns every year, the market for student properties will remain buoyant for the foreseeable future.
Unit 2 – Student lettings pay
Renting properties is all about the yield. And guess what? Yields on student digs are higher than average. Landlords can expect 12% in Nottingham, 11% in Durham, and over 8% in Manchester. You can even get 5% in London where the rental market has been in the doldrums recently.
Student lettings yields are so high because multiple students live under the same roof. Landlords can regularly find groups of five or six students happy to live together, plus you can charge rent per person (or room) rather than per property. You don’t need a maths degree to see how that rent adds ups.
What’s more, although some landlords believe that jobless students represent a financial risk, the opposite is actually true. Research shows that student tenants are the best at paying rent. They receive regular maintenance loans, often pay up front, and can always resort to the bank of Mum and Dad if all goes wrong.
Unit 3: Students want the same things
Most students prefer houses with a minimum of three bedrooms and two toilets. They don’t expect luxury but they do need a home that’s warm and clean with decent broadband (which they’ll need for their studies).
Students’ other needs are simple too. Agents should encourage landlords to provide functioning appliances plus basic furniture like a bed, desk, and wardrobe in each room, with a sofa and dining table in the communal area. Supplying a hoover will also help to keep those carpets clean.
The other thing to consider is location, location, location. Students crave properties with quick access to their university campus, shops, transport links, and those all-important pubs and bars. Any property within a 30-minute stroll will do.
Unit 4: Be a pro at dealing with the cons
Letting to students does have some drawbacks. Many will be living away from home for the very first time and won’t have DIY skills. Therefore, landlords should be warned to expect extra calls about snags that seasoned tenants could deal with on their own.
Students are also highly sociable animals. They like to invite friends round and, whisper it quietly, host the odd party or six. But there’s no need to worry. You can outlaw parties as a deterrent (whether you want to enforce this or not) in their tenancy agreement. Plus you won’t mind the extra wear, tear, and occasional breakages so much if you’ve invested carefully in cost-effective furniture.
Another potential problem is tenant referencing. Your average student won’t always have an employer or previous landlord that letting agents can contract. Therefore, always insist on a guarantor.
Meanwhile, there’s the common issue of void periods in summer. Don’t worry too much about this. Many students will happily sign 12-month leases as it gives them somewhere to stash their stuff during the holidays. What’s more, landlords could cash in on any void periods by offering lucrative short-term rentals to other parties.
Unit 5: Further reading
Here are some extra tips to pass on to your landlords. Student landlords can convert second reception rooms into bedrooms to boost their profits. It’s also a great idea for them to become official university-approved landlords. This helps students to feel reassured when they dig down into their new digs’ details.
It’s important for landlords to stay on top of the little details too. Inventories play a vital role in monitoring broken and missing items. And landlords should also familiarise themselves with the House in Multiple Occupation rules too.
Finally, make sure that your tenancy agreements obligate households to find a new tenant should one of the students leave. It’s not unheard of for students to fall out or quit uni altogether.
There are multiple reasons for landlords to target the students lettings market. So don’t automatically assume that trash metal-loving twentysomethings will trash their treasured properties. All students are different – just like people in general are different – so the chances of a successful outcome are the same as any other tenancy.
The trick is for landlords to treat student lettings like any other investment. Yes there might be wear and tear, and they might have to decorate more often, but initial outlays will be lower and they’ll love the conveyor belt of prospective tenants knocking down their door every year - not in the literal sense though, of course.
So that’s today’s tutorial completed. Were you paying attention at the back?
Curious about other ways landlords can change? Learn our thoughts on Landlords having a no pet rule here.