Student demand for renting is ripe
Bob Young is managing director of CHL Mortgages
The academic year may only just be beginning for thousands of university students across the country, but astute landlords will already have half an eye on the 2013/14 intake and be making the necessary preparations.
Indeed, while term time doesn’t get underway until the beginning of October, research by property firm Move With Us indicates that the majority of students begin their search for accommodation for the following year’s study as soon as they return from the Christmas break in January.
This may dispel some people’s preconceptions that students always leave things to the last minute, but with competition for the best properties fierce and the supply in many towns limited, it really is a case of first come, first served.
Working to the assumption that the average time between a purchase offer and completion is 54 days, landlords wanting to have their property on the market by the beginning of 2013 will do well to work to an unofficial deadline of 1 November.
This gives property investors keen to capitalise on the student lettings market just a month to add to their portfolio.
While Move With Us discovered from its contact with 41 university accommodation officers that 51% of students look for rental properties in January and February, a super-keen 21% start their search in November and December for the following October.
They may not all show such diligence towards their deadlines, but today’s students are quick off the mark when it comes to where they live.
It is also fair to say they are more discerning than previous generations in terms of what they expect from a rental property.
Any landlords thinking that students will be happy to slum it in the squalid conditions that The Young Ones made do with are in for a rude awakening.
Today’s students expect modern and bright bathrooms and kitchens, ample living/socialising space, broadband internet connection as standard and a convenient location in relation to their campus.
Properties will also need to be redecorated and refurbished annually, although the expense involved can be offset by the deposits that all students are required to pay.
There are issues to be aware of when preparing properties for student lets that may not necessarily crop up with other types of lets such as Houses in Multiple Occupation legislation and obtaining the necessary accreditation from local universities, but the extra legwork is more than compensated for by the rental returns that can be realised.
For example, consider a typical three-bedroom, two reception house. The rent that you could hope to achieve on such a property is obviously dependent on the area, but an average expectancy if renting to a family would be £800 or so.
By converting a reception room to a fourth bedroom and targeting the student market, it is not unrealistic to expect to charge £500 or so per room per month, which would total £2,000 – a massive increase on the original amount.
As with any type of rental property, when letting to students it is vital that you understand your market, but the rewards are there to be reaped if you do things properly.
With more than 100 universities in the country and countless other institutions of higher education, there is plenty of demand waiting to be tapped into.