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In conversation with a student landlord

Tuesday 15 August 2017

By Carl Agar

Students will be hitting the news this week with A-level results coming out, so I thought I’d write a blog about being a student landlord.
 
There’s no doubt that students have a bad reputation for parties, accidental damage, and unreliability, and many landlords won’t touch them with a barge pole. But there is still money to be made in this market - if you go into it with your eyes wide open.
 
So what do you need to know, what do you need to look out for, and what pitfalls do you need to avoid?
 
I interviewed a landlord with a large student-let portfolio to get the inside track…
 
Hi. Can you tell us if you think renting to students a good investment strategy? Why?

 In principle yes, it is good, the return is good and the yield is high but you do need to be careful where you invest. Each university town/city is different, competition is getting tougher as new institutional investors are moving into the market.

 
What are the pros of letting to students?

I’ve always thought it’s like having the income of a HMO (House in Multiple Occupation) but all on one tenancy. This is great protection as all tenants are joint and several liable so if one doesn’t pay then the others still responsible for the unpaid rent and often the parents will guarantor the rent.

 
What are the cons?

I think the downside is that most tenancy only last for one year or two year max, there is a lot of wear and tear on properties and you can guarantee a light refurb is required after every let.

 
What led you to target students? Is this your main investment area or part of a more diverse strategy?

I’ve been operating on the student letting market in Sheffield for over 25 years. I’m not from the area but went to university in Sheffield. I do have other business interests but in terms of property investment its strictly student housing for me and mainly in Sheffield and Nottingham!

 
What mistakes do you see people make in student-letting, and how can you avoid them?

At the minute I’m seeing some Landlords letting property by the room and letting any empty rooms on Airbnb! It’s a big mistake to mix the two and can only lead to problems.

 
What should people be looking for in an investment area?

I look for a strong well respected university that is growing and that does not have a great deal of its own accommodation other than halls of residence.

 
What do you look for in an investment property?

Most of my properties are shared houses so I look for good sized bedrooms with plenty of communal space. I always make sure I can get high speed internet on the property as it’s a big thing that students look for! Believe it or not in some areas you can only get 2mb which is useless if you have 5 tenants streaming TV.

 
How easy are they to run once you’re up and running – and what systems do you need in place? I’d like to know how much time it takes up and what issues you tend to face.

In one area I use an agent so that’s dead easy, but the ones in Sheffield I run myself. Most of the time once they are set up its fairly easy, I use some software to track rents and certification etc. Most of the issues I get are around overflowing waste and noise complaints from neighbours!

 
How often do you inspect, and how often do they need maintenance/work?

I try to do it every three months but to be honest sometimes its 6 months. Most work is done in the summer when the students have gone home.

 
How do you find/manage tenants?

Most university towns have an accreditation scheme for Student Landlords and that can be the main route to access tenants. I normally attend the accommodation fairs and often secure tenants in January that move in the following September.

 
How do you deal with problems/issues? Do students deserve their reputation?

My tenants just call me and of I have any problems reported from neighbours about their behavior then I just write to the tenants and their parents, works fine for me!

 

What do you look for in landlord insurance?
I supply properties furnished so I go for the building and contents policy with both malicious and accidental damage.

 
What would your advice/top tips be for landlords new to the student market?
Be very careful where you buy, some areas have Article 4’s in place that prevent you from operating the property as a student house - and be very careful of towns in which institutional investors are investing heavily in as the parents of students do tend to prefer their accommodation, especially the parents of foreign students.
 
Will you continue to invest in student lets? What’s next for you?
What’s next for me is retirement and I’m currently working on my exit plan!
 
So there we have it – straight from the student-landlord’s mouth!
 
If you want to invest in student accommodation, research your area carefully, avoid anywhere where the market is monopolised by big investors, and plan maintenance and renovation costs into your figures up-front.
 
Make sure you’ve got comprehensive landlords insurance for buildings and contents, and make friends with the neighbours! They’ll help you keep tabs on your properties.
 
Finally, check the rules. You might need an HMO licence, a Unviersity licence, and beware of Article 4s.
 
Good luck with your investments, and good luck to all the students getting their A-level results this week.
 

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Article by:

Carl Agar

Carl Agar

Carl Agar is the managing Director of Big Red House letting agents, founder and Chief Executive of The Home Safe Scheme, has been the Yorkshire representative of the National Landlords Association for the last decade - the UK’s largest landlord association, as well as being a Landlord and Investor.