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Mention students and most people have shivers running down their spines! But mention higher than average property yields and the rent being covered by grants and guarantors, then things suddenly become more appealing...
The average student house has a yield of around 8% and tenants who contract for a minimum of one year!
Sounds all too good to be true I hear you cry! Well, as with any property, the success of the investment is in the strength of the management of the Tenant. If you have good tenants in, who have been fully credit checked, ensure you have a comprehensive inventory in place and do regular checks on the property whether as a Landlord or through a reputable Letting Agency.
The laws will vary slightly from locality to locality, but generally there is a very big difference between needing a HMO license and being a HMO property!
To explain, any property where there are three or more people living, forming more than one household, would be classed as a HMO property. Which means that if a couple are sharing with a third person, then this will be considered to be two households. A family renting a property would be one household.
A property requiring a HMO license would be if the property has 3 or more liveable floor levels and is occupied by five or more people.
Having said this, Council’s in the area have introduced C4 licensing of student properties, which is compulsory registration for student properties if there are 3 or more students living in the property – currently this is ward specific rather than the whole area.
Put simply, yes! The other considerations when looking at Student lets are:
When renting to a group of people, it is always essential to ensure the property has wired in Smoke detectors on all floor levels and adequate fire prevention such as fire blankets in the kitchen and fire extinguishers on each floor level.
Although Student Property conjures up images of complete dives, this is pretty much past, not present - the standard of accommodation has improved considerably and we always notice that the better quality, the property, the quicker it lets and it tends to be the dives that attract the more last minute student, which normally leaves the Landlord with a vacant property for several weeks over the summer.
Proximity to the University is key, and another bonus would be if the property was located near local shops and bus routes as often Students don't drive. We always find that Student properties that fit the above category will always rent first!
Most student lets are for 12 months from 1st July - 30th June meaning that once you fall into the student letting calendar, the property should be constantly tenanted. Occasionally students will ask for discount over the summer months, but the majority of Landlords avoid this unless there is allot of maintenance needed.
Once you can get the student property onto the rental calendar and provided the property is well maintained, then there should never be a void period.
At Lettings Direct, we have a clear understanding of the rental market for student properties, there are only specific times in the year when students will be looking for a new house where it is vital to get the property ready to be advertised at the right time, if that window is missed you may be at risk of lengthy void periods or have to significantly reduce the rental figure to ensure an income.