What you need to know about letting to students
Historically, letting to students was seen as pretty much the bottom end of the buy-to-let market. Students were viewed as party lovers, who would treat the property like a dump; landlords of student properties were widely criticised for providing dated, often unsafe housing that lowered the tone of a neighbourhood. But that’s rarely the case in today’s market.
Tighter health and safety legislation and a shift in the profile of students has meant landlords have had to up their game. Like any other tenant, students are now looking for clean, up-to-date properties that offer a good standard of living and modern amenities. So, if you want to compete with the best purpose-built student units, you’ll have to consider providing en-suites, Wi-Fi and smart televisions. And with local councils increasingly cracking down on sub-standard accommodation and tenants themselves more aware of their rights and the responsibilities of landlords, you’ve got to invest money ongoing in keeping the property up to scratch.
Legal requirements for the property
The most common type of student let is a house, with a number of students each having their own bedroom and then sharing communal facilities. If you’re letting to five or more students, this will be classed as a house in multiple occupation (HMO), which carries certain legal requirements and may need licensing. Importantly, as each local authority has the power to impose its own laws on property licensing and decide what constitutes an HMO, speak to your local council to find out what their policies are, as even two or more students sharing may mean you need a licence.
You’ll certainly need to adhere to tighter fire regulations, including:
• Fitting fire doors
• Installing interlinked smoke alarms and heat sensors or a mains panel system
• Having fire extinguishers on each floor
• Fitting thumb-turn locks to external doors.
As with any buy to let, you should speak to the local fire department, who should be happy to send a fire officer to assess the property and give you guidance.
The tenancy agreement
While you could issue separate assured shorthold tenancy agreements (ASTs) to each student - which would give you the right to enter the communal parts of the property at any time, without notice, as they only have exclusive use of their bedroom – by far the easiest route is to have all the students on one 12-month AST. This benefits you in several ways:
• The students are jointly and severally liable for the rent. This means that if someone leaves during the year and a replacement can’t be found, the remaining tenants are legally obliged to make up the total rent owed, meaning you don’t lose out financially.
• You can make the students responsible for all the utilities. When each tenant is on a separate AST and may be moving in and out at different times, the rent usually includes utilities, as it’s impossible to administer in a fair way otherwise. However, when the whole property is let on one agreement, you can pass the responsibility for paying bills onto the tenants.
• You don’t need to worry about holidays, as they’ve signed for 12 months.
• If you don’t want to manage the let yourself, it’s much easier to find a managing agent if there’s just one AST. Multi-let HMOs are more hassle to manage, so there are fewer agents who are prepared to take them on.
Referencing and obtaining guarantors
You’ll need to reference each student and, because they’re not in full-time work, it’s very common to ask for a guarantor for each person – usually a parent. You (or your agent) will need to reference the guarantors in the same way as you would a tenant, but this will give peace of mind that regardless of what happens with the students, you can always pursue the guarantors for rent or other costs. A side-benefit is that when their parents are financially invested, student are far less likely to cause problems or damage the property!
You’re less likely to have voids
A big benefit of letting to students is that they tend to plan well ahead for the next academic year. So, as long as you provide a nice home and are perceived as a good landlord, your existing tenants may well stay for the duration of their degree course. Then, when they do move on, students who are either starting their studies or moving out of university halls will be looking to secure accommodation for the upcoming academic year well ahead of time, so you’re unlikely to suffer from long void periods.
Is it a good idea to buy something for your own children?
This can be a very good move, if you have the funds to do it. Many university towns and cities are experiencing positive, steady growth in house prices and the student population is growing UK-wide.
You’ve got a choice of what to buy, from a small flat for just your children to use, to a larger house for them to share with friends, but this will depend on how much you have to invest and what kind of return you are hoping for from the investment.
Whatever type of property you’re considering letting, make sure you speak to:
• The student accommodation office, to find out what types of property are most popular, and where
• The local authority, to find out what types of HMO are permitted, whether you need to be licensed and any other planning and health and safety regulations you might need to satisfy
• Local estate and letting agents, to make sure you buy something that will always let well, if you decide to hold on to the investment for the longer term.
Because we play by the book we want to tell you that…
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.