When you become a landlord, your principal objective is likely to be one of generating and maintaining a steady income stream from the receipt of rent – that is the very nature of the landlord’s business after all.
In order to achieve that end, it is important to have a keen idea of your target market since this is likely to determine such basic factors as the rent you may charge, the standard of accommodation you strive to achieve, and the way in which you market your let property.
Since one of the target markets popular with a number of landlords is the student population, it might be worth taking a closer look at what your market pitch might involve and other considerations in letting to this type of tenant:
Before you begin
- before deciding whether to pitch your property towards students, you might want to check that they are the type of tenant approved by your insurers;
- it may seem odd, but some providers of landlord insurance might not offer cover for tenants who are students, benefits claimants, asylum seekers or some other particular group;
- on the other hand, some providers have no restrictions, such as let property insurance providers Cover4LetProperty;
- there is little point in aiming for the student market, of course, if your property is well off the beaten track and far from the nearest college or university;
- these are the places most students will want easy access to and many will be relying on public transport – or their feet – to get to and from the classroom or lecture theatre;
- convenient access to college or university is likely to be a must therefore as might be the critical question of affordability;
- the cost of rent might be the single most important factor as far as many students are concerned – and this is a factor that appears to be borne out by estate agents Primelocation;
- functionality – and with it a lower rent – is likely to count for more to the average student than any fancy aesthetic or clever design;
- as with any letting, however, it is important to remember that tenants are typically looking for value for money – students are no different;
- it might be important to remember that students as tenants are not necessarily an easy touch, but may have demands which you have to work hard to meet whilst still offering value for money;
- despite the healthy excess of demand over supply of student accommodation, in other words, you might want to keep in mind that you are still in competition with other local landlords for this segment of the market;
Duration of tenancies
- as a landlord, you might be looking to ensure continuity of rental income;
- with students, however, any tenancy is likely to be relatively short-term – three years being a long time and tenancies more likely to run for a single academic year (from September to June);
- the turnover may in fact be an advantage since it means that you are unlikely to be stuck with more difficult tenants for any length of time – although this is no reason for omitting the need for proper screening and the scrutiny of references before any tenancy begins;
- a regular turnover of tenants may be made easier to manage since, in college towns and districts, demand is likely to exceed supply and you may find it relatively simple therefore to sign up successor tenants;
- in order to ease some of the strain to you in finding replacement tenants as terms end, you might include a clause in the tenancy agreement that if a tenant leaves before the end of the tenancy, they are responsible for finding or nominating a replacement;
- when letting to students you might encounter particular difficulties in taking up the kind of references you might normally expect;
- because of their young age and relative inexperience, for example, they might simply not have any employment, banking history or references from a previous landlord;
- in the absence of a meaningful credit check, you might want to consider asking for an independent guarantor to back up the legal and financial responsibilities that come with a tenancy agreement – in most cases, of course, this is likely to be a parent;
- as a further measure of security, you might also want to limit prospective tenants to those students who are able to produce a letter of recommendation from their college – if the good name of the college is at stake, the student may have a greater incentive for behaving as a responsible tenant;
- a potential error made by landlords who may be new to a buy to let business is in the nature of the relationship between landlord and tenant;
- of course, you are likely to want a civil, cooperative and understanding relationship with your student tenants – but that does not mean going out of your way to be friends or bosom buddies with them;
- as a reminder published in the Telegraph newspaper in February 2015 points out, it is a business relationship and not a friendship;
- if you keep things firmly on such a footing, you might avoid the temptation of just dropping by as often as you feel like it and limiting what are essentially business calls to once every three to six months – and then after having given at least 24 hours notice of your intended visit;
- in this way, you are more likely to be able to hold a more business-like discussion about who is going to pay for a broken window or stains on the carpet.
Students already represent a significant proportion of the population. As more British students enter college or university and as the number of foreign students in this country grows, that population looks set to become even bigger.
With a little care and attention and appreciation of some of the particular aspects of student tenancies, this segment of the market may prove a valuable target for your buy to let business.
Further reading – Running a successful student let.