Students have a reputation for being bad tenants, thanks to their general love of binge-drinking, hate of deep cleaning, and inability to manage money. But, do they really pose a bigger risk than reward when it comes to renting out a property?
According to a recent YouGov survey, 40 per cent of respondents* said they would not want to rent their property to students. But, are a few bad apples spoiling it for the whole bunch?
While house parties and drinking are a huge part of student culture, let’s not forget what students often need most is money. They have to pay a costly security deposit to secure a property and need as much of that money back as possible at the end of their tenancy. This means properties have to be kept in a good condition, and the majority of students will go the extra mile to ensure they can reclaim as much of their deposit as possible.
One 23-year-old student renter described her experience of renting a property with the epitome of a stereotypical student housemate while at university: “In my final year, I shared a house with the most stereotypical student tenant you could ever imagine. He would leave the kitchen in a mess, littered with empty bottles and pizza boxes, and hoard dirty dishes in his room. One time, he couldn’t even be bothered to take the dishes from his room to the kitchen, so he threw them out of the window into our garden. He would smoke in the house and we would find cigarette butts in the bathroom sink – not a sight you want to see when you’re brushing your teeth in the morning. At the end of our tenancy we had to do a pre-clean before the cleaners even turned up.”
However, this aside, one very important factor to take into account is that renting to students can be extremely lucrative, especially when dealing with international students, and landlords could be missing out by dismissing the student lettings market.
According to the UK Council for International Affairs (UKCISA), 19 per cent of all students studying in the UK in 2014/15 were international. Due to the fact that most landlords will want tenants to have a UK-based guarantor – as it would be easier for them to take legal action if need be – international students often have to pay a lump sum of six months’ rent at a time, which, therefore, gives the landlord a significant proportion of their annual rental income upfront, meaning fear of rent arrears is not an issue in this instance.
Not only this, but international students often come from extremely wealthy backgrounds and have plenty of cash to burn.
Foreign students – especially those who come from outside of the EU – often pay over double the tuition fees British students pay, and still have enough cash left over to rent some of the priciest student pads available. Property developers have been quick to pick up on the deep pockets of international students and have developed high-end, luxury accommodation targeted specifically at this market, with luxury student studios fetching up to £17,085 a year.
But for the more average landlord, renting to more average students, there are certainly advantages to student lettings still to be reaped. Properties located near popular universities are consistently in high demand, as the constant turnover of new students fuels the rental market in these areas. Landlords can either take advantage of high demand and increase rents, or they can choose to keep rents relatively low and guarantee a steady flow of students and fewer void periods.
In 2015, Save the Student found the average cost of student rents across the UK came to £373 per month, per student, with London students spending on average £477 a month. Due to the fact that many student lettings are Houses of Multiple Occupancy (HMOs), properties are rented out per room, meaning landlords can charge a little extra for the overall price of the property and actually end up earning more than an equivalent let to a family or young couple.
Overall, Nick Marr, co-founder of TheHouseShop.com, sums up why landlords should think again when it comes to students: “Many landlords take a negative view of student tenants, as proved by the results of the aforementioned survey, but this shouldn’t deter them from taking a serious look at this niche market – they may be surprised by what they find.
“The niche market for high-end, luxury rental accommodation, targeted specifically at international students, is booming, and there are very few other sectors where you can find the same levels of consistent demand and high yields. These types of properties tend to appeal to students from the Middle East, the US and Africa, who will happily spend more than £2,000 a week for a rental property during their studies.
“Perhaps shockingly, I recently saw a three-bed apartment in London listed for rent in a development specifically targeted at international students advertised at £21,000 per month. Although this is an extreme example, there is still serious money to be made in the more realistic mid-high-end market. So, landlords, take note: don’t dismiss student tenants without giving them a fair shot.”