Student market offers opportunities for cautious landlords
Students in the United Kingdom did not always have a great reputation as tenants, with prevailing stereotypes portraying many undergraduates as messy, late with rent and not always reliable. But times are changing and according to The Observer, many residential landlords are keen to tap into the very large market of student housing needs, and now is the best time to look into this option. Despite the on-going recession, the number of Britons who applied to university this past year increased by 8 percent, according to statistics released by the University & Colleges Admissions Service. While some predicted a decline in college enrollments due to economic problems, it is precisely the current financial crisis that may have convinced many to delay their entry into the job market. Assetz, a major investment firm, estimates that landlords who rent flats or homes to the student market can expect yields of approximately 6%.
Some, however, caution that since rental supply is up throughout much of the country, yields may actually be somewhat lower, even if the student buy-to-let sector often outperforms the rental industry’s overall average. Residential landlords that do decide to tap into the student market should, however, keep a few important factors in mind. Louise Cuming of MoneySuperMarket believes that landlords should set their monthly rates slightly higher than normal, if they are targeting students in particular, so as to ensure that they have the necessary funds to repair any damage after the lease’s expiry. Additionally, landlords must be sure to have enough money set aside to make between three to six months worth of mortgage payment, in the case that student tenants are late with rent.
Thank you to Esther Shaw of The Observer for the initial report.