BTL Properties for Students: A good idea?

One of the first key decisions you’ll need to make as a new property investor is deciding who your ideal tenants are. This is important as it decides on the location and type of property you’ll invest in. Students are a popular option, but are they a good one?

Student tenants can be great for landlords because they are happy to share a property with others, have low expectations and usually don’t cause too many problems. However, these days student properties are much nicer than they used to be so expectations have been raised.

Of course, there are always exceptions to the rule, so let’s take a closer look at the pros and cons of letting to students.

BTL properties for students: good or bad?

Student housing has become increasingly popular as those attending university seek to live near campus and the facilities on offer, and so investing in the right property, in the right location, will make it easy to attract student tenants.

Advantages of letting to students

Renting to students has become popular among landlords across the country. Here are five benefits of renting to students.

1. High demand: Housing close to educational facilities usually has a high demand from students, so there’s little risk of void periods during term time.
2. Loyal tenants: If you’re a good landlord who provides good quality housing at a reasonable rate and is available to discuss any issues that arise you’ll find many students will be loyal customers, returning year after year.
3. Lead generators: If someone has to leave the property, you can expect the remaining housemates will help you fill the room, often inviting friends to join them. If you have other properties in the area, you can ask your existing tenants to let their friends know about the availability.
4. Lower expectations: Generally students value location and price over everything else. This means you don’t need to spend a fortune on the kitchen and bathroom; just make sure everything is in working order and in good condition.
5. Multiple income streams: A single tenant provides one income, with multiple tenants you have the overall rental price split and paid by multiple tenants. This provides you with some protection should there be an issue with one tenant not paying, you’ll still have income from the others.

For those with a portfolio of different properties in the same city, you may also be able to benefit from retaining student tenants after they’ve graduated. At least some students will want to relocate to the area full time and if you have a property free they may be interested in continuing to rent from you if you’ve demonstrated you’re a good landlord.

Disadvantages of renting to students

Reading the above you might think renting to students is an attractive option. However, there are several disadvantages to consider.

Students Can Be Unreliable Tenants

Students often want to change their living situation as the year goes on and their social circles change, with the making and breaking of friendships and relationships a big factor in wanting to move.

Those in the first year of study, and therefore the first time away from home, can leave due to homesickness, or because the course and lifestyle aren’t living up to expectations. Others may need to return home due to the cost of attending becoming too much of a burden.

Students May Cause Property Damage

For many, going to university is the first step into adulthood, where you can do what you want when you want. This can lead to unintentional damage to your property thanks to parties, drunken behaviour and general silliness.

Putting aside any alcohol-fuelled antics, students often lack the life experience of running and maintaining their own house, which means they may not know how to spot potential problems and report them to you before those little problems grow into big, expensive to correct problems.

Students are known to be messy

Let’s be honest, the first time away from home is an exciting one, and cleaning will be the last thing on most people’s minds! You should plan on giving the property a deep clean between tenants to prepare it for next year’s tenants.

Students are short-term tenants

Your perfect tenant is someone who pays the rent on time, looks after the property, and is happy to live there for many years. As university courses are typically 3 years, and many will spend the first year in halls of residence, you can be in an annual cycle of having to find new tenants.

What are BTL properties?

A BTL property is a buy-to-let property, a house or flat that is rented to students. Students will typically rent a property located close to, or with good transport links to, their university campus.

As with any buy-to-let-investment, you’ll need to renovate the property to be ready to rent, and will have to source tenants, something that can happen more frequently with students compared to other types of tenants.

Who can invest in BTL properties?

Buy-to-let properties can be a fantastic investment, especially in the long run as we’ve seen a consistent increase in property prices, meaning you can make additional money when you’re ready to sell the property.

It might surprise you to learn that BTL is available to all sorts of individuals.

1. Students

When you think about the perfect landlord for students, then students themselves make a lot of sense. They understand the needs, wants and desires of potential tenants, they’ll know the local area, the night life, the transportation options.

If they have the means, or by working with their parents, students can start to create a source of income that will last beyond their own time at university.

2. Parents

If you’re a parent looking for ways to help your child attend university, one choice is to invest in a BTL property near the child’s university.

The number of students is increasing dramatically, meaning there will be more demand for rental properties.

Some parents will still expect their child to pay rent, as part of the general life learning experience, or they can offer it rent free in return for the child acting as the onsite landlord, filling vacancies and addressing any problems that arise.

Parents can keep the property after graduation to continue to earn income, or they can look to make a small return on their investment by selling the property.

3. First time investors

For those looking to get into property investment, student accommodation can be a very tempting offer. The house prices are a major factor in where to invest, but by selecting somewhere close to a university campus you’re a lot more likely to be able to easily fill the property.

That means you can look across the country. For example, Staffordshire University has a campus in Stoke-on-Trent, where terraced housing ideal for students has sold for around £100,000, far cheaper than prices in other parts of the country.

FAQs

What is student property investment?

Student property investment is popular in the UK because of the high occupancy and rental yields. To invest in student property, you need to know the type of student property and the city it’s located in.

For example, London has a large number of residential properties that are used by students. Properties in cities such as Manchester and Oxford also have high occupancy rates, making them popular investments for students.

What are the main types of student property?

Any property type in the right location could be used by students.  Houses are the most common as they allow for multiple tenant occupancy. 

How do I get started in student property investment?

To get started see: Property investment for beginners