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All You Need To Know About Renting to Students
Renting to students can prove very lucrative these days – especially if you have a house with more than one bedroom. Get the right location ie near a university or college and within walking distance of bars, cafes and other entertainment venues, and you could certainly be set to profit.
Is Renting to Students a Good Idea?
It is easy to see why so many choose to let out their properties to full-time students. With an easily sustained demand, reduced furnishing costs, higher rental yield and longer tenancies, it sounds like the ideal scenario for many rental property owners. With this being said there are a great deal of influential factors on the success of renting to students.
Whilst we have mentioned the maintained demand for rental opportunities in student towns, this has of course not gone unnoticed by the rental industry seeing not only the universities themselves construct accommodation for students, but many private firms have tried to capitalise on this also, making some areas extremely competitive.
Further to this, landlords may have to plan for vacant periods to fill the months where university students have left town. With this being said it is not uncommon for some owners to insist their occupants agree to a 12 month fixed term, preventing any loss in rental income.
Can You Make Money Renting to Students?
It goes without saying that perhaps the greatest concern of landlords is the preservation of their rental income, with void periods posing a significant threat to the financial stability of a portfolio; exposing the owner to mortgage interest payments, repair costs and management fees, although without an income to soften the blow. But, when renting to students this fear is somewhat alleviated through the consistent demand seen across student hubs. With each new academic year comes a fresh wave of potential tenants, all specifically seeking the type of rental opportunity you’re providing, placing far less pressure on landlords. As is seen outside of the student rental sphere, because of this sustained increase in demand that far outstrips the supply of available rentals, many landlords are able to enjoy a higher rental yield than if they were to let to another rental demographic.
Alongside this consistently high demand for student rental opportunities, full-time students will typically seek out longer-term tenancies, allowing them to secure a new home for the full academic year, relieving the landlords of renewed marketing fees, referencing charges and the pressure of navigating void periods.
Why Do Students Need a Guarantor?
Simply put, a guarantor is an additional party to the tenancy agreement that is held responsible for clearing any rent arrears the tenant may accumulate. Whilst the use of guarantors is not exclusive to full-time students, its wider application with the demographic is in part due to their youth. Many full-time students will be unable to commit to regular working hours because of their studies, making their income undependable and occasionally insufficient to cover the terms rent. Because of this landlords will look to secure their rental income by requesting that their tenants obtain a guarantor before proceeding into the tenancy. Typically, students will turn to their family and close friends to fulfil this role, but it is worth noting that the guarantor will be subject to similar affordability checks to those found in the referencing process to ensure that they are able to cover any rental payments, outstanding bills or damage left by the tenant.
Why Do Landlords Not Allow Students?
Somewhat synonymous with renting to students, many rental pretty owners that turn to this demographic will at some time experience or hear of rent arrears. With their target tenants committing to additional studies occupants will not be able to meet the requirements of a typical tenant as they will likely have insufficient income to satisfy the affordability checks contained within the referencing process. Because of this apprehension, many student landlords choose to simply ask their future occupant to obtain a guarantor before moving into the rental property. This measure will protect the landlord’s rental income, ensuring that even if the occupant of the property were to face some difficulty in making their rental payment, the guarantor would be legally responsible for covering the missing sums.
With this being said the lack of dependable income for the tenants presents another unique problem that is only seen within student renting, in that the aspiring tenants will all be unable to provide references from previous landlords, or a sufficient credit history, two of the most significant barometers for landlords when evaluating if a new tenant would be a good fit for their rental opportunity.
Common Student Landlord Problems
In the majority of instances, when letting to full-time students your rental will likely be their first taste of living independently. Because of this, students will typically seek out fully furnished rental opportunities, presenting slightly higher upfront costs for some landlords. With this being said student rentals will often provide somewhat basic contents as a result of the expected increased wear and tear.
This increased susceptibility to damage is another worry of landlords that exclusively let to full-time students. Naturally, landlords will want to safeguard their investment and to this end tenants should remember their obligation to return the rental property at the end of the tenancy in a similar condition to that it was originally let. If come the end of the fixed period the owner discovers damage to the property or its contents that goes beyond simple wear and tear, these costs will be recuperated through a deduction in the amount of the tenancy deposit the tenants will have refunded.
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