The ultimate guide to renting to students05-01-2023 | Property Occupants
Renting to students can be incredibly profitable. There were a staggering 2.66 million students in UK higher education institutions in the academic year 2020/21. With this in mind, student landlords will rarely experience a shortage of people making inquiries and registering their interest in renting your property!
On the other hand, renting to students comes with certain drawbacks. Student accommodation is often a student’s first experience of living away from home, so mess and damage come as part of the job. Additionally, the typical student lifestyle lends itself to plenty of partying and late nights making noise and potentially disturbing the neighbours.
There are some things you need to keep at the forefront of your mind when thinking about being a landlord who rents to students. To give you some useful advice, we’ve come up with this handy ultimate guide to renting to students to provide you with our insight into the most important considerations.
Can landlords refuse to rent to students?
Landlords in the UK can refuse to rent to students without it being classed as discrimination. This is because being a student is not a designated ‘protected characteristic’ protected by law, such as following a religion or belonging to a particular ethnic group or race.
So, what can put landlords off renting to students and becoming a student landlord? Well, we’re all aware of the student lifestyle and stereotype of throwing house parties where damages can happen. Not to mention the fact that students get long holidays, so the house would remain unoccupied out of term time.
However, let’s not be hasty and tar all students with the same brush, certainly not all of them are avid relentless party animals. Many students are dedicated studious bookworms and harmless. Students can be excellent tenants who fully respect your property.
Is investing in student property a good idea?
Reflecting on whether investing in a student property is a smart move financially will be a crucial factor in making your decision to become a student landlord and the answer will be different for every landlord. Here are a few benefits of investing in a student property:
- Student properties are often located in inner city areas where homes are generally cheaper to buy
- HMOs (households in multiple occupations) tend to be sold at a lower price in the UK
- You can generate significant profits over a long-term period as a student landlord
- Students typically pay higher rent than other tenants, so you can expect to enjoy yields of up to 20% higher for a shared student house in the right location
- Demand for student lets in student towns and cities is always high, often with a high student-to-property ratio
- You can rent out individual rooms to multiple tenants, so if one tenant moves out, you will still have the income coming in from the other tenants.
However, like with any investment, there are inevitable risks and downsides that can come with investing your money into student properties. Here are a few of the drawbacks to be aware of:
- Student properties are typically older properties and this can result in higher maintenance costs
- It can be harder to secure a mortgage for a HMO property than with a standard residential property
- Your property may be at greater risk of higher levels of damage and wear and tear
- Student properties are often left unoccupied out of term time.
What are the legal responsibilities of a student landlord?
Just as with any other tenants, student landlords have legal responsibilities to adhere to. Failure to do so can result in hefty fines or even prosecution! The law in this country requires student landlords to:
- Obtain a landlord licence from your local council if the property is in a selective licensing area. You may need a HMO licence if your property will be a HMO
- Provide a tenancy agreement for them to sign
- Provide a copy of the government’s ‘How to Rent’ guide
- Adhere to the Tenant Fees Act 2019 by not charging tenants for things like carrying out credit checks or referencing
- Ensure all gas equipment and electrical equipment in the home is safely installed and properly maintained, whilst producing an Energy Performance Certificate with a minimum rating of E and a Gas Safety Certificate
- A copy of the latest Electrical Installation Condition Report
- Place the tenant’s deposit in the government-backed Tenancy Deposit Protection (TDP) scheme within 30 days of receiving it and provide tenants with the details of which scheme you’ve used
- Check all occupants will be over the age of 18 at the start of the tenancy agreement
- Verify all tenants have the right to rent your property, including their immigration status and how long they have the right to reside in the UK
- Verify that tenants are fully registered students by requesting evidence of certificates of enrolment or student cards
- Follow all fire and safety regulations and regularly test smoke alarms and carbon monoxide detectors.
As you can see, there are many legal responsibilities of a student landlord. None of these should be overlooked. Ensure you undertake comprehensive research before embarking on your venture to be sure that you are covering all bases!
What does a letting agent do for a student landlord?
Many student landlords decide to enlist a letting agent to help keep on top of all the admin that comes with the job. They can play a pivotal role in finding you suitable tenants, marketing the property, conducting viewings, mediating the drafting of the tenancy agreements and serving as a point of contact for tenants.
You can choose from a few different levels of service when it comes to using a letting agent, depending on how much or how little you need handling. The most basic of these service levels is tenant-find only. This is where a letting agent will find tenants for your property and arrange the let. This will usually collect references, conduct credit checks and collect deposits.
Full management is the top tier service which essentially involves the full management of your tenancy and managing all aspects of the rent. You can expect to pay around 10-15% of the monthly rent collected for this service.
So, should you use a letting agent? That all depends on how hands-on you would like to be as a student landlord! Using a letting agent certainly frees your time up to focus on other things. They will also help to ensure that you are following all legal requirements, regulations and legislation to avoid you getting into hot water. However, if you prefer to be in control and want to build relationships with your tenants, you may prefer to do it yourself.
If you do decide to use a letting agent, make sure that they are a member of a professional standards body such as The Association of Residential Letting Agents (ARLA), The Royal Institution of Chartered Surveyors (RICS) or The National Association of Estate Agents (NAEA). If they are not, you might be better off avoiding them.
How much rent should a student landlord charge?
It can be difficult to determine how much rent you should charge as a student landlord. After all, students aren’t usually rolling in disposable income! And more often than not, you will be charging rent for each individual room which differs from your usual residential tenancy. To give you an idea, the average cost for weekly rent in the UK in private sector accommodation averaged £155 a week for an ensuite room.
How much you charge in rent will often be determined by what your property can offer. Location is a biggie. The closer you are based to university facilities and the local landmarks of student life such as bars, restaurants, supermarkets and gyms, the more you may want to charge in rent. Does your property offer a garden? A basement for extra living space? These can also come at a premium.
It’s also important to consider whether you are going to operate on a ‘bills included’ basis or not. You may decide to charge slightly more in rent to cover the bills and not charge your tenants separately based on usage. This is often preferable for students who can afford to pay a little more, as it’s one less cost to keep tabs on amongst the chaos of student life.
We recommend speaking to a local letting agent to give you an idea of what is considered a reasonable level of rent for the size and location of your student property.
Do students have to pay council tax in a student property?
No, full-time students are exempt from paying council tax. And in fact, your whole property is exempt from paying council tax if solely occupied by full-time students – so you don’t need to pay council tax either! If only one or a couple of your tenants is a full-time student then this blanket exemption does not apply. The same can be said if your property is occupied by part-time students.
You should be aware that the local council may ask you for proof that your property is only occupied by full-time students whose academic course is at least 12 months in duration.
It’s a good idea to get hold of your tenant’s Certificate of Student Status as proof for your local council. Some may accept the student’s university student number and course details as proof.
It’s a good idea to vet tenancy applications through the screening process where you request references from students’ previous landlords. You want to ensure you’re renting to trustworthy students who will ultimately pay their rent and bills on time and provide you with little to no problems as a landlord.
Asking for references helps to ensure you’re getting reliable tenants that other landlords have enjoyed positive interactions in the past. Any poor household habits such as late rent payments should be picked up in the references to give you a heads-up.
Part of the screening process is running a credit check. Remember, it won’t be unusual for a student to fail a credit check. This is by no means a sign of a bad tenant. Typically, many young people have bad credit and this is often because they have never borrowed money, used a credit card or paid bills.
So, if bad credit isn’t necessarily a red flag then what is? If a prospective student tenant cannot provide you with any references or if they omit information on their application then you should be wary. A good tenant should be able to answer all of your questions without hesitation. They should be happy for you to run any background checks. If they seem nervous at the prospect of this or give you long and cultivated stories about problems with previous landlords, they could potentially be problematic.
Do students need a guarantor?
To protect against sticky situations, most landlords and letting agents will ask students for a co-signer or rent guarantor living in the UK. This is someone who will be able to pass a credit check and pay the rent if a student cannot. You may also want to get contact information for the student’s parents or guardians in case you do encounter any issues along the line such as late payments or behaviour.
Guarantors, parents and guardians act as somewhat of a safety net for student landlords to help resolve issues. If a prospective student tenant does not have anyone that they can offer as a guarantor, this may pose an issue for you. You may decide that you cannot rent to them for this reason or you may decide to point them in the direction of a private company to act as a guarantor. Just be sure to do your research carefully as not all of these companies are trustworthy.
How to rent a room to international students
Finding a niche as a landlord can usually be pretty profitable. Perhaps you would like to market your student property specifically to international students. Renting to international students can be especially lucrative for landlords. The UK is the second most popular global destination for international students after the US. With that in mind, your international student market is pretty large!
International students may prefer to live with other international students who can relate to the lifestyle of living in a different country and who maybe even speak their language. Make sure you highlight that you are looking to rent to international students when marketing your property. You may want to scour international student forums and Facebook pages in order to give some visibility to your property listing.
There are a few things that you need to remember when renting a room to international students. You should:
- Ask for documentation to verify their immigration status and that they have the right to rent your property and reside in the UK during the entire duration of the tenancy agreement
- Remember that international student’s understanding of the English language won’t always be high, and you have to be patient and prepared for that
- Remember they may have travelled from across the planet and not visited the UK before. Be sensitive about cultural differences
- Provide them with a friendly welcome plan with lots of local tips on things to see and do.
How to rent to mature students
You may wish to rent to mature students. Again, this can be a profitable market. Mature students may wish to live with other mature students that share their lifestyle and may be willing to pay a little more in rent in order to live somewhere more ‘premium’.
Mature students often have more life experience under their belt, so many landlords often feel more comfortable renting to this demographic. Over 50% of undergraduate mature students are aged 21 to 25, and 40% are over 30.
Yet, that isn’t to say that having mature students as tenants will be a walk in the park and you won’t come across the same issues you see with younger students. Of course, mature students can also love partying! Like with your younger student tenants, make sure you follow the usual screening process and collect deposits and guarantors.
Student property maintenance
Maintaining a student property requires effort and commitment from landlords and student tenants alike, with both parties needing to do their bit. Bad news spreads quickly in the student bubble. So, you certainly want to earn a reputation as a helpful student landlord who cares about resolving maintenance issues promptly and providing students with optimal living conditions.
How to maintain a student property
Property maintenance is an important part of any landlord’s responsibilities. This doesn’t change if you are a student landlord. Renting to students can be a little daunting if you are worried about cleanliness and maintenance! The best way to keep on top of this is through regular property inspections and an inventory with photos of the property’s condition prior to the start of the tenancy.
With a student tenancy, you may want to carry out property inspections every three months in order to keep tabs on how your property is being treated. Any more frequently than this could be deemed as harassment, so be careful not to come on too strong! When you undertake your property inspections, cross reference against your inventory to identify any damage.
If you are not satisfied with the condition of your property, let your tenants know as soon as you can with advice on how to change it. Set a date for the next inspection, ensuring you leave a reasonable amount of time for them to make improvements.
If you are particularly concerned about your property’s condition deteriorating, you may want to consider providing a scheduled cleaning and maintenance service to tenants and adding it to their monthly rental costs.
It’s also important to think about the types of furnishings that you are offering within your property. Remember, students don’t often own furniture! So you’ll need to provide the basics such as beds, sofas, storage and dining equipment. Choose wisely when it comes to furnishing a student property. Stay away from fabric sofas and opt for easy-to-clean faux leather options.
Speaking of furnishings, have you considered the appliances you intend to get for your student property? Perhaps you are tempted to provide a dishwasher to prevent the infamous pile-up of dirty plates and kitchen utensils that students tend to accrue in the kitchen area. Little decisions like this from the landlord could have a large impact on how well students maintain the property. However, don’t forget that household appliances aren’t cheap these days and these add to the list of items that you will be responsible for maintaining.
Internet connection is also something to consider. Students usually require the internet to be able to study at home. You will quickly receive a mountain of complaints if you don’t make an effort to give your student tenants an excellent internet package with a rapid, uninterrupted connection.
It’s also important to remember that student properties are often older properties. Older properties can have higher maintenance requirements that need taking care of including:
- Leaky roofs
- Faulty boilers
- Old plumbing
- Unsafe gas fittings
Do students have to pay a deposit for a rental property?
As a student landlord, deposits will be your best friend! Let’s face it, many student landlords are faced with having to make deductions to deposits at the end of a tenancy due to issues big and small. It could be something as minor as a cracked freezer draw, or something as major as a hole in the wall! You can also make deductions based on missing items such as keys and unpaid rent.
It’s important to note that you cannot make deductions for fair wear and tear. This is a notoriously grey area for landlords and is one reason why keeping a detailed inventory with photos is a good idea. This will help you distinguish between damage and reasonable use. As much as it would be nice, you cannot expect your property to come back in the same condition you rented it out in at the start of a tenancy!
When taking a deposit, you must store this deposit in a Tenancy Deposit Scheme by law. You must register the deposit within 30 days of receiving it in one of the three government-approved tenancy deposit schemes:
You must let your tenants know which scheme you are using. If you decide you need to make deductions from the deposit at the end of the tenancy, you must confirm this in writing. After any deductions have been discussed, you must return the deposit money to your tenants within 10 days.
Educating students on property maintenance
Education is everything. Remember, some of your student tenants may have never lived away from home before. Try to teach students how to look after their home living space. This may involve putting up polite reminders and instructions around the house and approaching any cleanliness and wear and tear issues with compassion and understanding.
Think they may struggle to manage appliances such as the oven? Provide a list of instructions for anything within your property that may warrant it. These everyday household skills are valuable life lessons that could save you and the tenants a lot of time and hassle.
Landlord insurance for student landlords
Whilst it is not a legal obligation in the UK to have landlord insurance, that certainly doesn’t mean it should be overlooked! The majority of buy-to-let mortgages require you to have landlord insurance as a pre-condition, and you’d be mad not to have it under your belt as a student landlord. Here at CIA Landlord Insurance, we offer a competitively priced policy that can be tailored to meet your individual requirements.
With our extensive panel of insurers, we are able to include full accidental damage, malicious damage and landlord liability for up to 10 students sharing one property. We’ll help build your student landlord insurance policy around your needs and we won’t be beaten on price!
If you are a student landlord and have yet to take our landlord insurance, get in touch with us today and let us help you get the cover that you need for your investment. Give us a call on 01788 818 670, request a callback or fill out our online enquiry form.
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