7 reasons why 7 out of 10 landlords may be wrong to refuse students, and 1 why they’re right.
A recent survey conducted by SPCE, the student letting app, found that most landlords won’t let to students. They are scared of the damage that students do to a property. They’re scared of rent going unpaid. In short, 7 out of 10 landlords don’t trust students enough to let them rent their property.
Research conducted by the National Landlords Association concludes that it is even worse than this. It found that more than 8 out of 10 of its members wouldn’t accept students as tenants.
On the flipside of the equation, students aren’t particularly happy with landlords. The survey also found that 6 out of 10 students found getting a rental property was “more stressful than job hunting”, and 7 out of 10 students feel that student accommodation is usually of poor quality and poorly maintained.
Would you be right to refuse students as tenants?
If you own a property in a university town or are considering investing in one, targeting the student market may not be the loss leader that so many landlords believe. Here are seven reasons why you might be wrong to refuse to rent to students.
1. There’s a huge and growing demand for student accommodation
Whether you think that Tony Blair’s ‘Education, education, education’ policy was misguided baloney or unequivocal genius, and despite the rising tuition fees that students now must find, more youngsters are entering further and higher education than ever.
There are now around 600,000 new students in universities up and down the country every year. The total student population in the UK looks set to break 2.5 million within a few years. Every single student needs somewhere to live. That’s one enormous pool of demand.
2. Forget universities as residences
Most university campuses were developed for much smaller student populations – when the population was a lot less, foreign students were few and far between, and less than 10% of all UK schoolchildren moved into higher education.
Halls of residence cannot cope with the numbers of students. Most only cater for first-year degree students. After this, students are sent into the world to find their accommodation. Most look for shared, private rented accommodation.
3. Renting to students provides protection against recessions
During a recession, with fewer jobs available for youngsters, more school leavers tend to go to university. Student accommodation tends to provide the property investor with protection against recession.
4. High net yields
When you rent a property to students, you get to maximise its rental potential. It is because it is an HMO (house in multiple occupations). For example, from a three-bedroom apartment, you could receive three lots of rent. The sum of the parts is certainly greater than the whole. The higher rental income achievable from an HMO means that your net rental yield is often higher than the gross rental yield on an ordinary buy-to-let investment property.
5. Rent payment is not usually a problem
Contrary to popular opinion, collecting rent from students is not usually a problem. In fact, students are often good rent payers. Especially as their parents are the most common guarantor. That’s like having a rental guarantee.
6. Students often become long-term tenants
When you rent to students, you often find that they become long-term tenants. They stay in a property for the duration of their degree, provided they like your property (and you), of course. We’ve known students to stay together on a property for four years and longer. That’s tenant longevity that many buy-to-let landlords don’t have.
7. Some accommodation is custom-built for students
If you invest in a custom-built student accommodation block, this usually includes property management. Often, this is provided by the property administrators, and sometimes by the university.
Such properties provide students with the benefits of living in a hall of residence. There are common rooms and study areas. Wi-Fi is included. Many are just a few minutes’ walk from the university, while at the same time offer proximity to nightlife, shops, and part-time work.
Should you rent to students? The HMO issue
If you want to maximise the rental potential of your buy-to-let property, and it is close to a university, you may be considering renting to students. The stigma of student renting is largely unfounded, and often the result of poor landlords believing that they can rent out any old property to students. Such landlords don’t maintain their properties well, and never return the calls from their tenants.
However, to rent to students, you will need to ensure that your property meets the HMO standards. And this is most likely the reason so many landlords won’t rent to students. It’s not the students that are the issue, it’s the cost of converting a property into an HMO, and then maintaining it as such.
Plus, while several lots of rent sounds attractive, you also have several lots of tenant admin to control. An HMO let to students is hard work. Soon, the 7 reasons why you might consider renting to students may be outweighed by the effort and cost of managing an HMO.
If you are considering converting to an HMO in a university town, contact one of the Ezytrac team today on +44 01522 503 717. We’ll help you weigh up the pros and the cons, and ensure you have considered all aspects, costs, and potential income. This way, whatever your decision on your property, it will be the right one.
Yours in effortless property management,