There is a general consensus among landlords that letting to students is not only time consuming but also stressful, as you will spend most of your time chasing late rent payments and dealing with noise complaints. However, a survey carried out by the National Landlords Association (NLA) in 2013 showed that students are actually among the most reliable tenants and are also less likely to fall into rent arrears than other tenants.
Keeping this in mind, you may want to start thinking about expanding your lettings business to include student lettings, and when you see the yields that student properties can provide we can’t blame you! However, even though students aren’t the nightmare tenants we once thought, being a student landlord still requires a certain amount of skill and knowledge.
For example, most students choose to live in a group in one single property, meaning you may have to register it as a House in Multiple Occupation (HMO). In order to let an HMO, you are required to adhere to strict criteria set out by the Government and local councils, as it’s important you’re not letting a property that doesn’t have enough facilities for the amount of people living there.
However, before we get ahead of ourselves, here are some tips for those that are thinking about becoming student landlords:
Tip 1: Pick the Right Area
You may think that in order to become a student landlord all you need to do is go to a university town and invest in a buy-to-let property, however, this is definitely not the case. Each university town is different, along with the types of students that attend each university, so you need to do your research. For example, some universities specialise in catering for mature students, which means they may be less likely to live in large groups, or could even have families you need to consider.
Meanwhile, the difference in properties near city universities and universities in rural areas is huge, which means you need to think not only about what you can offer your tenants but also how far your money can go. For a property in London, your money will probably get you something much smaller than in Canterbury or Totnes.
Tip 2: Learn about HMOs
As previously discussed, if you are planning on letting out a property to a group of students, you may need to register it as an HMO. In order to ensure that your request will be accepted, the property must include:
- Smoke detectors in every bedroom and communal areas, as well as a heat detector in the kitchen.
- Adequate washing and cooking facilities for the amount of people living in the property.
- Communal areas that are of good standard and can be used by everyone living in the house.
- Annual gas safety checks and electricity checks every five years.
On top of all this, you must also ensure the property is not overcrowded and always kept in good repair, otherwise your tenants will have the right to complain to the local council. You should also ensure that your landlord insurance policy is comprehensive enough to cover an HMO, otherwise you could find yourself having to cover costs in the future.
Tip 3: Draw up a Watertight Tenancy Agreement
Even though the NLA’s research showed that students are one of the most reliable groups when it comes to rent payments, it’s still essential for all student landlords to create a tenancy agreement that protects them from any issues.
Student lettings can fall under the same rulings as an HMO, but not always. You can have all the students and/or guarantors under one Assured Shorthold Tenancy agreement (AST), where they are all jointly and severally responsible for the rent – so if one tenant doesn’t pay the others have to make up the shortfall. If they decide to take on a new student sharer, a new AST would need to replace the original one with new references etc.
Your tenancy agreement should also contain information concerning how damages will be dealt with, as if they are caused in a particular tenant’s room, it can be considered their responsibility, while if it’s in communal area, all the tenants will have to pay. This ensures there will be no arguments at the end of the tenancy, and if you need to use any deposit money to cover damages, you should be able to gain access to it quickly and easily.
- Students ‘most reliable tenants’ for buy-to-let. (2013). Retrieved from The Telegraph website: https://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/10282796/Students-most-reliable-tenants-for-buy-to-let.html
- HMOs (house in multiple occupation). (n.d.). Retrieved from the Spare Room website: https://www.spareroom.co.uk/content/info-faq/HMOs/
- Legalities in England and Wales. (2013). Retrieved from the Student Landlord website: https://www.studentlandlord.com/legalities3.asp
Disclaimer: This article is for information only and is not official guidance, FCA approved, or legally precise. Just Landlords has used all reasonable care in compiling the information but make no warranty as to its accuracy. If you require information on landlord legislation or best practices please contact your legal representative. For details see our conditions.