John Warburton, director of Belvoir Leamington Spa, reveals some simple steps to investing in a successful student let.
Providing properties for students can be profitable and rewarding but it’s important to do your research carefully and fully understand the market before investing.
There are a number of fundamental differences between letting to students and non-students so it’s vital that you are aware of the potential benefits and possible challenges before you commit.
One of the key benefits of investing in student lets, of course, is that you will get a high yield, generally of between 7 and 11%.
This is because more individuals will be paying rent within the property, plus some student landlords choose to convert living spaces into additional accommodation in order to maximise this potential.
You must, however, be aware of Article 4 Direction and know whether this applies in your area. As from April 2012 some councils require planning for change of use if you are converting, for example, a three-bedroom unit into a four-bed property.
The number of people responsible for the payment of rent is also a benefit as you won’t be relying on a specific individual.
At Belvoir Leamington Spa we place the students on a joint tenancy agreement so that they are all responsible, plus guarantors are put in place.
So, what type of properties are ideal investments for the student market?
If you have a university close by then most properties will make great students lets.
It doesn’t matter whether it has one-, two-, three- or four-bedrooms because all types of properties are in demand. Larger properties are likely to command higher yields, of course, but make sure you understand HMO and licensing obligations before committing.
Steps to success
In order to help make your student let a success there are a couple of things you can do.
Preparation and communication is vital. If you’re going to invest in the student market you’ve got to be prepared to put the work in, both with the students and the property itself, particularly in the month when it’s empty and you are likely to updating and upgrading at speed.
Make sure you offer a property that is well presented and in a good condition. Don’t think that just because they’re students they will be happy with sub-standard accommodation – they won’t. In fact, I believe that the level of presentation offered will dictate the type of tenant you will attract and if your property is a very good standard it is likely to be treated better.