There are 2.75 million students in the UK and this number is increasing each year. With more students currently studying at university than over the previous 10 years, the benefit of becoming a student landlord has never been greater. But sometimes being a landlord to tenants studying at university can be seen as risky business. And whilst it doesn’t come without its hazards, it can also be incredibly rewarding, not to mention a great opportunity to add to your investment portfolio.
There are lots of things to consider when it comes to letting to students, and as the insurance specialists for the education community, plus the Best Landlord Insurance Provider (voted at the Insurance Choice Awards, 2021), we’ve created this guide to help you along the way when buying a student house to rent.
So, let’s get started.
Landlord requirements when letting to student tenants
One of the main reasons some landlords start off tentative when considering student tenants is because of the reputation of the student lifestyle. Perhaps new to living alone, a lack of life experience and starting to get to know their alcohol limits. The lifestyle can sometimes lead to increased wear and tear on the property and more maintenance required at the end of the tenancy.
But not all students are the same. And even the ones who are still learning the ropes can still be respectful of the place that they live. The relationship between a landlord and student tenant will also be set by legal and contractual requirements to help protect both parties. Here we’re going to explore some of them.
Legal requirements for student accommodation
For the purposes of this article, we’re going to focus on renting privately to students, but you can read more about legal requirements for private and university accommodation here.
Deciding whether to use a letting agency to manage student tenants
A common decision that most landlords face is whether they want to rent directly to the tenant or use a third-party letting agent to manage the property for them. Each option has its pros and cons, including implications on both time and finances. However, when renting out a student property, there are additional considerations that you need to be aware of (such as taxation, health and safety laws etc.), which a letting agent may be able to guide and support you with.
For example, did you know that the House of Multiple Occupancy (HMO) regulations changed in 2018? Now, any property with a minimum of five tenants from at least two separate households is considered an HMO. These types of situations will need careful consideration so that you are always abiding by legal requirements, providing a safe environment for students and fulfilling your duty of care as a landlord.
Legal requirements prior to letting to students
• Obtaining a landlord license
If your property is in a selective licensing area, or you will be renting to multiple occupants, you’ll need a landlord or HMO license.
• Gain official consent to let the property
You’ll need to gain consent from any superior landlord, mortgage provider, lender or insurer.
• Consider data implications
If you’re renting privately and will be collecting, processing or storing personal data, you’ll need to register with the Information Commissioner’s Office (ICO). If you’re using a letting agent, you’ll need to speak to them about their processes and who the responsibility lies with.
• Be careful with tenant fees
The Tenant Fees Act 2019 prevents tenants having to pay fees for referencing, drawing up contracts/inventories, carrying out credit checks or other tasks in relation to administration.
• Gain student verification
You’ll need to verify that your tenants are full-time students who are registered at an educational institution.
• Check immigration status
If you’re letting within England, you’ll need to do a ‘right to rent’ check on your potential tenants’ immigration status.
Legal requirements at the start of letting to students
Just like the above, there are various things you will need to do, or provide your student tenants with at the start of their tenancy. These can include, but aren’t limited to:
• Relevant documentation such as an Energy Performance Certificate (EPC) with a minimum rating of ‘E’ (before the agreement is signed), a valid Gas Safety Certificate (the day they move in), a student-focused tenancy agreement outlining duties and rights of the landlord and tenant, and a copy of the government’s guide, ‘How to rent’.
• Information on which government-approved tenancy deposit scheme you’ve chosen to store their deposit in (within 30 days of receiving the deposit).
• Details on using safety equipment within the property.
• A copy of the most recent Electrical Installation Condition Report (EICR) – if the property is in England.
Legal requirements regarding the student property condition
As a student landlord, there are legal requirements you’ll need to fulfil in relation to the condition of your tenant’s property. These include ensuring:
• The property is fit for human habitation.
• All electrical appliances are in safe working order, ideally ‘PAT tested’.
• All plugs, sockets etc. comply with the UK standard.
• Current fire safety and resistance requirements are met regarding furniture and upholstery that you provide
• There are no obstructions to fire escape routes and the property manager and student tenants are aware of evacuation plans.
• Measures are taken to mitigate the risk of fire.
• If the rental property is situated in England, rooms with combustion appliances must be fit with a carbon monoxide monitor.
• There is one smoke alarm (minimum) on every storey of a property which is used for living. These should be tested at the start of the tenancy and a record made.
Legal requirements during letting to students
Whilst letting to students, you’ll need to:
• Update the council that there are student tenants in your property.
• Consider water hygiene and checks for legionella.
• Make relevant property repairs, such as damage to the property’s structure, supply of water, electricity, gas etc.
• Always make sure you’re abiding by the tenancy agreement.
• Ensure that your property meets legal requirements if it is classed as an HMO.
Things to include in a student tenancy agreement
A student tenancy agreement is one of the most important documents you’ll need to put in place when letting to students. It outlines both the landlord and the students’ crucial rights, and any arrangements that may have been made in relation to the letting of the property. Here are some key things to include in your student tenancy agreement:
• Important details like the names of the landlord and tenant, tenancy start date, the property address etc.
• Information about whether all tenants are responsible for the full rent (this is referred to as being ‘jointly and severally liable’), so that if one tenant cannot pay, the other tenants are responsible. This should be very clear in the agreement and it’s a sensible idea to communicate it to the tenants directly too.
• Details about the length of tenancy, cost of rent, method of rent payment and when the rent cost will be reviewed.
• Information on bills, for example, whether they’re included with rent, who will be responsible etc. Although this is usually the tenant’s responsibility, it isn’t uncommon for HMO and student landlords to offer all-inclusive tenancies (rent and bills included in the monthly payment).
• Deposit details including the amount payable and the instances that would lead to deductions (for example, unpaid rent, property damage etc.).
• Detailed summary of the tenant and landlord’s responsibilities.
• Details on guarantors (if applicable).
• Information on the tenants’ notice period, including any break clauses if relevant.
• Details on the early termination of a tenancy, including grounds for termination.
• Confirmation on whether tenants are allowed pets. If so, then consider adding a pet clause.
• Confirmation of whether you allow subletting.
Student property management
When the finer details are out of the way and your tenants are moved in, you’ll be focused on ongoing student rental property management. Your experience will likely vary depending on whether you manage the property yourself, or rely on a letting agent, but here are some tips to help you to develop your own smart way to manage a student rental property.
Renting to students - tips
• Communication is key
You should have set all your guidelines out clearly in the student tenancy agreement, so this should lay a good foundation for a healthy landlord-tenant relationship. Once this is out of the way and your tenants are moved in, you may want to check in with them every so often, to give them an opportunity to let you know how they’re getting on and whether there are any issues that need to be dealt with. Sometimes student landlords allocate a ‘lead tenant’ who acts as a spokesperson for the property. This can be helpful as it prevents multiple strings of conversations and makes it easier to arrange visits to the property.
• Remember that this will be many students’ first experience of renting
As many students won’t have rented before – or even lived away from home – keep this in mind as you communicate with them. The government’s ‘How to rent guide’ is a good resource, but government documentation can sometimes be a little ‘official’ and daunting. You might want to consider putting together your own student-friendly list of things to expect, for example, a summary of the different safety checks that need to take place and also be sure to explain the context of any visits to the property.
• Never undervalue a good set of students
As we mentioned above, the experience of being a student landlord can vary depending on what kind of students you have. So, if you get a good set of tenants, it pays to keep them on board.
Student degrees usually take three to four years to complete, with many students choosing to pursue postgraduate study. So, if you’ve found good student tenants who keep your property in good nick and pay their rent on time, make sure you keep hold of them!
As well as being safe in the knowledge that your tenants are reliable, renewing a student tenancy agreement also reduces the risk of a costly period of unoccupancy. Some students would prefer to stay in their university town over the summer period, so allowing them to remain in the property (or sublet, if they decide to return home) during this time is a strong incentive for them to renew their tenancy agreement.
Remember that student communities are tight-knit, and in some university towns good accommodation is limited. If your tenants have had a positive experience, they’re likely to recommend you to other students. This means that you may be able to find next years’ tenants without even having to advertise!
• Make sure you’re covered
While it’s important that landlords have a good understanding of student tenancy rights, it’s equally important to protect yourself and your property. Student landlord insurance is essential for providing cover that standard home insurance does not. This type of landlord insurance includes various elements of cover such as loss of rent and extended unoccupancy.
How can Endsleigh help?
With over 25 years’ experience in the landlord market, Endsleigh’s student landlord insurance can help you save time and money with specialist policies tailored for landlord portfolios. Our student landlord insurance provides extended unoccupancy cover when your property is let to students. It also includes loss of rent and property owners’ liability cover. If you want to find out more about the insurance policies we offer, contact us today on 0333 234 1552, or get a quote here.
Are you a landlord deliberating whether to rent out your property to student tenants? Read our blog on how to become a student landlord to find out everything you need to know.