Forget high yields but student landlords can still win

The most recent figures from the UK University & Colleges Admissions Service (UCAS) showed an 8% increase in higher education applications last year, as more people looked to delay entering the jobs market.

That is especially good news for landlords with properties in university towns, where the yield (the percentage of a property’s price returned in annual rent) can be considerably higher than normal buy-to-let properties, sometimes as much as 10%.

Graham Kinnear, MD at Landlord Assist, said: "Very few students are able to afford mortgages, so there remains plenty of scope in the student market, particulary in so-called university towns. The market tends to be predictable and reliable as students tend to stay in a property for at least a year at a time.

"After students complete their studies they generally plan to return to their home town, therefore it is uncommon that they refuse to leave the property."

But his colleague Stephen Parry warned that landlords should not be blinded by the hope of increased yields.

"In the current economic climate landlords across the board are fighting to retain tenants, and also competing with ‘accidental’ landlords who have entered the market offering cheaper rents because they are unable to sell their property. As a result there are more properties out there for students to choose from and this will no doubt affect the monthly return that landlords can expect to earn."

Landlord Assist also warned that renting to students was different from the average rental property. Prospective landlords looking to enter the student accomodation market must consider the legislative requirements prior to entering the market.

Houses may need to be licensed under the "houses in multiple occupation" agreement, deposits must be protected under the tenancy deposit protection scheme; fire, gas, electrical and other safety requirements must be met; and landlords are also legally required to show tenants an energy performance certificate.

Landlords must also be prepared to deal with a higher level of wear and tear and have funds available to correct any damage ready for the next academic year.

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