Property investors looking for fresh opportunities can’t afford to pass up the student let sector. The UK is home to some of the world’s most respected universities, ensuring there is a steady stream of young tenants from home and abroad, and achievable yields can surpass those seen in the mass buy-to-let sector.
Read on for the top 7 reasons why students are buy-to-let’s tenant superstars and important considerations when considering this lettings sector:-
Student lets: top 7 highlights
1) Increasing number of students - the number of students in the UK is rising (2.32 million in the 2016-2017 academic year), and UCAS has found more 18-year-olds in England are applying to university than ever before.
2) Shortage of halls accommodation – universities are failing to build halls of residence in line with rising tenant numbers and the NUS revealed 38% of students live in privately rented accommodation.
3) Attractive yields – in the latest studenttenant.com report, student landlords with properties close to the top ten performing universities had the potential to achieve rental yields of up to 5.22%, outperforming other sectors of the buy-to-let market.
4) Purchasing advantages – landlords don’t have to buy in premium towns and cities to achieve the best yields. The studenttenant.com report also found Oxford, Cambridge and London had lower yields when compared with Warwick, Loughborough and Durham – the latter one of the cheapest places to invest in the UK.
5) Guaranteed rents – it is becoming far more common for student tenants to ask parents to step in as guarantors, giving landlords firm reassurances that the rent will always be paid. (They also tend to pay the 12 months rent across first ten - helping cashflow)
6) Beat a flat market – when property prices are stable, student lets stand out as they deliver higher than average monthly returns, reducing the reliance on a property’s appreciation prospects.
7) Chase yields across the country – landlords don’t have to live near their student let, even if they’re self managing. Viewber provides accompanied viewings, property inspections, check in and check out visits on a nationwide basis, allowing landlords to buy properties in the university locations where the best yields are.
Student lets: points to consider:-
Purpose-built student accommodation has raised the bar in terms of standards; therefore private landlords should mirror the specification, such as wifi and flat screen TVs.
House shares or HMOs (houses in multiple occupation) are subject to additional lettings compliance regulations.
Some local authorities now require landlords to obtain a licence in order to operate a HMO, so check with your local council as to what may be required.
International students generally look for new build accommodation in blocks with high levels of security and on-site facilities.
Students usually expect a degree of furniture and equipment to be provided, from beds and sofas down to ironing boards and cutlery, so factor this in to your figures.
Student lets, especially HMOs, can experience a high level of wear and tear.
Consider offering a ‘bills inclusive’ rental payment to students, and it may be useful to work in a weekly cleaner and/or bed linen change into the rent charge.
If you’re exploring the student let sector and would like to know more about Viewber’s student services, contact us to book an exploration call and demo.
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