Despite the Coronavirus pandemic affecting much of regular life over the past few years, one thing that has remained consistent is the numbers of students attending university and other higher education institutions.
In fact, in the last academic year (2020/21), there were over 2.6 million students in higher education across the UK, many of whom were studying full-time.
Of course, many students use the beginning of university as the opportunity to move out of home for the first time or relocate to a new city, meaning that the student let market rarely dips in demand across the country. According to the National Student Accommodation Survey, in 2021, 88% of students chose to live in some form of student accommodation over the option of staying in the family home, demonstrating how popular this market is.
As such, with a new academic year just a few months away, now could be an excellent time to get involved in the burgeoning buy-to-let market for student accommodation.
Scotland is home to some of the world’s best-known and most highly-regarded universities (particularly in Edinburgh, Glasgow and Fife), making it an ideal location for investing in the student let market. When students are done with their halls accommodation, many decide to look for privately-rented properties close to their campuses, to rent with friends or classmates, and enjoy a new type of independent living experience.
Student lets usually offer good rental yields, with many campuses being based in traditionally more affordable locations, and for those looking at the longer term, a student let can be a solid financial investment for a lettings portfolio.
Before getting involved in this particular segment of the lettings market, here are the basics that you should understand before investing in a buy-to-let property for students.
Location, location, location
All buy-to-let properties rely on their location, but with student lets, this becomes even more of a priority and can affect the success of your investment. If you can, you should opt to purchase a property close to a university campus, or ideally within thirty minutes’ walk, to boost the chances of your property being a strong investment.
Students rarely opt for a quiet suburban location, so choose somewhere with a thriving feel and lots going on, as close to the campus as you can afford. It should have plenty of student-friendly amenities nearby – think good transport links, lots of bars, shops and restaurants for socialising and job opportunities, and access to green space – as well as being close to a town centre if possible.
Know the rules
A popular choice for landlords investing in student lets is to purchase a bigger property and apply to use the House of Multiple Occupancy (HMO) model. An HMO is when three or more unrelated people share a property, and to do this, your property must have an HMO licence.
Given the rules around HMOs, it’s most commonly students that opt to use them – whether they know their new housemates or not.
If you are considering purchasing a larger property to convert to an HMO, you should factor the potential costs for associated works into your budget. HMO properties may need remodelling to add extra facilities, such as bathrooms for each bedroom, or even a second kitchen, and you should be aware that you will need to apply for an HMO licence from your local council.
You should also consider that there is currently a very high quality of purpose-built student accommodation available to students, lessening the demand for traditional HMOs, so if you choose to take this route, you should ensure that your property is of an equally high living standard to attract quality tenants.
HMOs generally apply to properties with three or more bedrooms due to the number of tenants, so if this option isn’t right for you, you should look instead for a one or two-bedroom flat, which will accommodate less people (and therefore generate fewer rental payments), but will not require licensing in this way, as long as less than three unrelated people share the property.
To furnish, or not to furnish?
When it comes to a student let, you should ideally be renting your property as fully furnished. Most students won’t have their own furniture or many of their own belongings, and will be looking for the easiest option for moving, so offering a fully-furnished property will make it even more appealing.
Landlords needn’t spend a fortune on furnishing the property, but you should consider what will make the property both attractive and easy to maintain – today’s students are a discerning bunch!
You should include furniture such as beds (with mattresses), desks and desk chairs, sofas, wardrobes and drawers in your student let, and appliances such as a kettle, microwave, toaster, iron and standard fitted kitchen appliances (oven, washing machine). Add on essentials like cutlery, crockery and basic kitchen equipment, but you don’t need to include linens or towels – although curtains/blinds and lampshades should all be part of the basic standard decor.
If you’re concerned about maintaining the condition of your property, choose durable, wipeable paint and opt for laminate flooring instead of carpet. It’s also worth investing in extras such as mattress protectors and sofa covers to protect the lifespan of your soft furnishings, and spend a bit of time installing picture hooks or pinboards in the property, to prevent the paintwork being damaged by posters and pictures being pinned or tacked to the walls.
Managing your investment
A student let can be a daunting proposition, with multiple tenants, lower or less regular incomes, the possibility of guarantors and a reputation for parties all on the cards. So, if you’re concerned about managing multiple tenants in a student let, a lettings management service is a great way to alleviate your fears and take the weight of responsibility from your shoulders. A professional property management service can handle everything to do with your student buy-to-let property, including finding responsible tenants with guarantors in place and good references, as well as managing inventories, repairs and maintenance, and dealing with monthly rent collections – so you can relax!
