Why student rentals are a smart investment for landlords

When entering the rental market, landlords often overlook letting their property to students, but in a market where demand regularly outstrips supply, there are lots of benefits that could make this space a great investment for you, particularly if you have a property near a university campus.

In this article we look at the benefits of letting your property to students, from high rental yields to consistent demand year after year, as well as exploring how Chase Buchanan can help you make student lets a success.

The benefits of letting to students

It's anticipated that there will be 2.2 million students requiring housing in the UK by 2026, marking a 39% increase since 2021 and leading to a potential shortfall of more than 620,000 beds due to rising demand and insufficient supply of purpose-built student accommodation. That presents a significant opportunity for landlords looking to rent properties in a competitive market. Here are some of the top benefits of letting to students.

Consistent demand year after year

While the rental market as a whole offers high demand, lots of factors can contribute to whether or not an individual property lets out consistently and with some degree of certainty. Properties in suitable and convenient locations for students enjoy a stable tenant base thanks to the arrival of a new wave of students each academic year, with universities attracting both domestic and international scholars. As a result, demand remains high, even in uncertain economic periods.

High rental yields

Student lets can offer above-average rental yields compared to traditional lets. This is because landlords can choose to rent properties by the room, which has the potential to generate a higher income. It's important, however, to be aware of parameters which might lead to the property being classed as an HMO (if the property is rented to five or more unrelated people), in which case landlords would need a specific licence, and to meet particular regulations for fire, gas, and electrical safety. This is something that a good letting agent will be able to advise on.

Guaranteed rent

One of the greatest benefits of letting to students is that rent is often guaranteed by a parent, guardian, or university-backed scheme, while others are supported by student loans. As students tend not to have an income that's sufficient to cover rental payments by itself, more often than not a guarantor is requested to guarantee the entire tenancy, both legally and financially. In some cases a certain amount of rent is also paid upfront - typically this is the first one or two months. This gives landlords added peace of mind that rent will be paid on time.

Practical tenant expectations

While it's important that all letting properties are presented to decent standards - both in line with regulations and from an ethical standpoint - students are typically more focused on practicalities at the properties they are renting, seeking functional, affordable accommodation over luxury features. That means that there's less pressure on landlords to provide high-end finishes or appliances. That said, it's important to remember that clean, safe, and well-maintained properties still attract better tenants and command better rents.

Longer tenancy cycles

With the upcoming Renters' Rights Bill seeing the removal of fixed-term assured tenancies, replaced with a general two-month notice period, many landlords will be concerned about the possibility of higher tenant turnover. Students will typically commit to a 12-month contract, even if they only stay at the property during term time, because it's most convenient for them. In many cases, they may well return to the property year after year for the duration of their studies, or recommend it to friends if they have had a good experience, creating a pipeline of tenants while minimising marketing spend.

Location advantages

Student properties are often located in or near to city centres, and close to university hubs, which are typically areas that retain the property value and offer strong capital growth in the long-term. If you're looking to purchase an investment property that offers a combination of strong rental yield, a high likelihood of consistent demand, and growing equity, then looking for houses and flats in highly desirable student areas could be a great fit for you.  

Fewer void periods

Timed well and marketed appropriately, student tenancies can be filled quickly with minimal void periods, helping to maximise your income potential. This is where a letting agent with a particular knowledge of the student housing market offers a significant advantage, ensuring that marketing is rolled out at the right times, in advance of the new academic year.

Tips for success in student lettings

Successfully letting properties to students has some differences to regular private rentals. Of course, meeting appropriate standards, rules and regulations remains imperative. Equally, ensuring you have suitable tenancy agreements in place, maintaining good communications, and keeping the property in good condition are consistent parts of the process. However, other things you may wish to keep in mind for a successful student let include:

●      Prioritising safety features such as fire doors, smoke alarms, and secure locks

●      Using a letting agent with student market experience

●      Understanding that students are often first-time renters and benefit from clear guidance and support

●      Consider letting the property with necessary furnishings that students may not have such as sofas, bed frames, dining tables, and kitchen appliances

How Chase Buchanan can help you manage student lets successfully

Chase Buchanan is an experienced, ARLA-regulated, lettings and estate agency spanning South West London as well as the South West of England including Bristol, Bath and Plymouth. We have a team of experts offering a range of services to support landlords and their tenants, whether you're letting for the first time or you are developing a portfolio of rental properties.

For more than 30 years we have been honing our experience in the property market, including specialist knowledge of student lets. That means that from marketing to valuations and management, we can support landlords, making letting your property to students hassle free.

For example, that includes, but is not limited to, advice and processes to ensure regulatory compliance and a competitive rental property, finding tenants, managing references, collecting rent, handling communications with tenants, arranging maintenance and repairs, and organising check-in and check-out processes on your behalf.

If you would like to find out more about letting a new or existing property in the student rental market, or you are considering investing in a student let, contact your local Chase Buchanan letting agent at any time.

Contact your local Chase Buchanan letting agent