October is just around the corner and soon the country’s 2.5 million students will be heading off to university.
That’s good news for those young people who can look forward to their years of study and fun. And it’s even better news for anyone contemplating renting a property to students.
Rents have risen by 61 per cent over the past decade and many landlords have made good money out of their investment. So how do you go about renting to students?
Dosh for digs: Student rents have risen by 61% over the past decade and many landlords have made good money out of their investment
First, you need to find out what demand is like in the town or city you have in mind. Refer to a study published by money.co.uk comparing the number of dwellings in each UK region to the number of properties occupied by students.
This reveals that the most lucrative cities are Exeter, Nottingham and Newcastle, followed by Oxford and Leicester.
The days when young people would settle for a Young Ones-style, overcrowded doss house are over.
‘A lot of our clients are quite wealthy and they will ask for en suites, dishwashers, driers and a good standard of decor,’ says Emma Croft-Pearson, of the Finders Keepers agency in Oxford.
‘And the market has changed enormously post-Covid. They also prefer to share with just two friends, instead of a large group.’
Croft-Pearson advises new landlords to choose a property in a convenient location, preferably within cycling range of both the university and the nightlife.
Budget for wear and tear on furniture, buy durable, hard-wearing white goods and assume you’ll need to pay for professional cleaners when each group leaves.
Discerning: Today’s students often want well-located homes with good amenities, according to Emma Croft Pearson of The Finders Keepers Agency in Oxford
‘And very important, show the students how the heating and ventilation system works,’ says Croft-Pearson. ‘Condensation spoils the fabric of a building and it’s often caused by students not knowing how to turn on fans or radiators.’
Croft-Pearson advises landlords to find out exactly what the council requires before granting a House of Multiple Occupation (HMO) licence.
You will need insurance for an HMO. Get a solicitor to check your tenancy agreement and ask for guarantors from students. According to Accommodation For Students (AFS), the average price of a room in an HMO is £113.85 pw before bills.
Investing in Purpose Built Student Accommodation
However, there is a new big beast in the world of student rentals: the Purpose Built Student Accommodation (PBSA), an apartment block, built with students in mind. The average price of a room is an eye-watering £144 a week.
‘They offer students a different experience,’ says David Feeney, a partner in the Cushman & Wakefield student accommodation team. ‘Students have their own bedrooms and bathrooms. There may be fitness studios and social spaces. Some even put on events programmes — like cooking classes.’
Feeney points out that PBSAs offer several benefits to the student. They have fixed utility costs. The tenant may also save money on gym membership.
James Forrester, at Stripe Property Group, who has PBSAs in Newcastle and Birmingham, says that investors in PBSAs should expect a yield of 7 per cent.
If you are contemplating buying an HMO property, you should be aware of two pieces of legislation in the pipeline. First, there is The Renters Reform Bill which, if passed, will do away with fixed-term tenancies. At present, students sign tenancy agreements for, typically, a year.
Also, by 2025 it will be a requirement that each HMO has an Energy Performance Certificate of at least C standard. Meeting that in older properties is likely to mean structural work such as installing double glazing and insulating the loft. This could cost £15,000 or more.
What is it like renting your property to a group of students?
‘Don’t imagine it just means handing over the keys and pocketing the rent,’ says John Curtis, who owns several student houses in Oxford.
‘I own Victorian terraced houses and repair work to the house or furnishings always needs to be done, be it mending a roof, replacing beds or buying new freezers.’
On the bright side, Curtis says: ‘I get a lot of satisfaction helping young people settle into their first years at university. It’s good fun.’