With an estimated 2.8 million students in higher education in the UK, letting student accommodation can be a lucrative market for landlords.
If your buy-to-let property is in a university city or student hotspot, there will be a continual demand, with a regular influx of tenants who aren’t looking for state-of-the-art accommodation.
© Dejan Dundjerski / Shutterstock.com
Benefits of student lets
While student lets aren’t for everyone, you can expect a relatively high return for older properties with multiple rooms. With more tenants in a student house than in an average family home, the rental potential is significantly greater.
Students normally prefer to live in groups, so they will need a house with multiple furnished bedrooms and plenty of communal space to socialise.
Converting a lounge into another self-contained bedroom can improve total income for the property. If your houses have more than one bathroom or toilet, they will be in greater demand and can generate a higher rent.
Student letting agreements in England
Entering into a letting agreement is an important step for both landlords and students, as it lays down the rules and gives both parties security.
When you set up the contract correctly, it ensures the living arrangement is laid out clearly, so everyone receives a fair deal. As a landlord, you should be transparent about every aspect of the tenancy.
Among the clauses in the agreement should be details of the students’ deposits and rent payments and whether any bills or council tax are included. The financial and legal side of the arrangement is, after all, the most important aspect.
Student accommodation will normally include landlord furniture packages, as most young tenants travel light and need a property that’s ready for them to move in. The tenancy agreement should detail who is responsible for damage or loss.
In simple terms, the contract will ensure both parties adhere to all the rules for landlords letting to students to avoid any issues occurring further down the line.
The student letting agreement can have a significant impact on the landlord’s overall experience, especially financially, so getting it right is crucial.
Different types of contracts
There are various kinds of contracts when it comes to student tenancy agreements. For example, a periodic lease covers a relatively short, specific period that normally runs monthly. As a landlord, this type of agreement gives you greater flexibility, with a shorter period of notice should you wish to terminate the tenants’ contract early. Students who are on short courses may prefer this type of agreement, such as those attending a summer school, or those who have come from abroad to study in the UK for only one term.
Another type is a joint contract, when one contract is drawn up for everyone who is renting the property, giving them equal responsibility for following its requirements and paying the rent. This can benefit you as a landlord because if one tenant fails to pay their rent, you’re within your rights to ask their fellow tenants to make up the loss. This will also be a wake-up call for the errant person who doesn’t pay, as their friends won’t be happy about having to find the extra cash. However, of all the tenancy types, this is the rarest, as if the tenants don’t know each other beforehand, they may be reluctant to rely on strangers to keep up their end of the deal.
The most common type is the individual contract. Every tenant is responsible for their share of the property, which includes maintaining their own room, paying their personal portion of the rent and being jointly responsible for any communal areas.
You may also require student tenants to have a guarantor, such as a parent or other responsible adult, who will agree to make the rent payment if the tenant fails to do so.
Remember, contracts will vary slightly, depending on where you are in the UK – e.g. guidelines are different in Wales.
Landlords and deposits
The government introduced the tenancy deposit protection scheme to ensure landlords put tenants’ deposits into an approved scheme. It relates to properties rented out after 6th April 2007 on an assured shorthold tenancy. The government-approved schemes in England and Wales are the Deposit Protection Service, the Tenancy Deposit Scheme and My Deposits.
This law was introduced to ensure tenants receive their deposits back if they meet the terms of the tenancy agreement, pay their rent and bills and don’t damage the property.
As a landlord, you’re required to put their deposit into an approved scheme within 30 days of it being given to you. At the end of the tenancy, once you’ve agreed with the tenants how much they will get back, you must return the deposit within ten days.
This is the procedure whether you’re letting your properties to students or any other tenant demographic.
Should I take out landlord insurance?
Landlords’ insurance for students is a very important part of the tenancy, as you must protect your rental properties and ensure your legal liability is covered. Student tenancy insurance is a specific type of cover tailored to meet their needs. Choose an appropriate level of cover and read the small print so you know what’s included and any exclusions.
Make sure you’re covered for any damage to the property, furniture, fixtures and fittings. A landlord is responsible for supplying and replacing student housing furniture in furnished properties if it becomes unusable through wear and tear.
However, if it’s damaged by an accident caused by the students’ careless behaviour, officially they’re responsible for replacing it, but they probably won’t have enough money. This is where student furniture insurance comes in, as you can then take your costs from their deposit at the end of the tenancy.
It’s also sensible to take out liability cover, including third party injury insurance, at your student properties. In addition, look for a policy that offers a rent guarantee to keep you covered if they fall into arrears.
Furniture for landlords
You should provide essential items of furniture and white goods for tenants including an oven, hob and microwave, fridge-freezer, washing machine, beds, mattresses, drawers and wardrobes. There are specific furniture packages for landlords that make it easier, less time-consuming and more cost-effective to furnish your student houses. All the furniture should meet the appropriate fire safety standards by law.
When one student’s tenancy ends and another begins, always check the furniture thoroughly to ensure it remains in good condition and replace any items as necessary – you can negotiate with the student, if necessary, at the end of the tenancy to reach a fair deal on how much of their deposit will be returned to compensate for any damage to your property.
There should be a clause in the tenancy agreement relating to caring for your furniture properly. This should make it clear the student could lose their deposit if the furniture hasn’t been looked after.
In the event of any disagreements, or even to draw up the student letting agreement if you’re struggling with paperwork, it may be sensible to get legal assistance to ensure you’re covered for every eventuality.