Each year new students move to a new city for university and second-year students move from halls into a house. This continuous need for student accommodation is a great business opportunity for landlords.
In the National Student Accommodation Survey 2020, it was revealed that over half of students live in private accommodation, 27% lived in university accommodation and only 12% were staying with their parents.
Students can make great tenants as they often have a reliable income from maintenance loans and are generally easy to please. However, several problems can arise that landlords should be aware of.
Meet the experts
To discover what precautions landlords should put in place to prepare for issues occurring with student tenants, we turned to the experts for advice:
What should a landlord do if tenants don’t pay their rent on time and can this be prevented?
Chris: “When letting to students, it’s usually difficult, if not impossible, to obtain previous landlord references and assurances that the prospective tenant’s income will be sufficient to cover the rent. As a result, it’s common practice to require the tenant to provide a guarantor who, in the event of missed payments, will be responsible for the rent.
“As well as providing a backstop, a guarantor agreement can reduce the risk of rent arrears as most students won’t want their landlord to contact their parents (or another guarantor) to chase for rent payments.
“A late payment can be a sign of issues to come or it could simply be a case of students getting to grips with running a household for the first time. In most cases, a phone call, followed up by a message in writing in case it’s required as evidence later on, is all that’ll be required.”
Charlotte: “We take a UK based guarantor or guarantor service for all of our tenants so in the event one of our tenants is unable to pay we have another party we can go to for payment which has effectively stopped non-payment being an issue. However, we do understand that the majority of our tenants are students and so allow a bit of leeway around the payment dates if, for example, they are waiting on finance or that month’s wages.”
Sasha: “A landlord can consider serving the tenant with notice, commonly a section 8 notice under the Housing Act 1988, and demand outstanding rent is paid within 14 days or otherwise face a possible repossession via the courts.
“A landlord can seek to terminate a tenancy based on a breach. However, late payments would generally not amount to a breach serious enough to warrant a court granting a possession order unless there are exceptional circumstances such as a long history of delayed payments.
“Landlords can seek to avoid rent arrears and late payments by ensuring prospective tenants are well-vetted and that any complaints the tenant may make about the condition of the property are promptly dealt with. A landlord can also seek insurance that may cover unpaid rent and the legal costs associated with evicting a tenant where the eviction is due to a breach of the tenancy.”
What should a landlord do if a tenant damages the property?
Helen: “It’s important to have a well-written tenancy agreement in place and an independent inventory from a reputable company.”
Chris: “The law states that tenants should behave in a ‘tenant-like-manner’, which essentially means that they should treat the property with respect and not deliberately cause damage. If accidental damage occurs, the tenant should either put it right independently or contact the landlord to explain and agree on a plan of action. In the case of malicious damage, the landlord may seek to end the tenancy to prevent it worsening and an application to the court for possession would be necessary.
“If the landlord discovers any damage, they may decide to make a deduction from the tenant’s deposit to cover the cost of repairs. Only reasonable deductions should be made and the tenant has the right to challenge any deductions with the relevant tenancy deposit protection provider at the end of the tenancy.”
Charlotte: “Students are definitely harder on the properties they live in than our professional tenants. Anything falling within the scope of fair wear and tear is of course not chargeable back to the tenants but if there are damages which fall outside of this, the landlord can charge these back at their discretion. “This is set out in the tenancy agreement and copies of invoices for the work are always provided to show only the repair/replacement of goods is being charged for and no additional charges are being levied. In the event there are large scale damages, our tenants may have to look at their insurance to help with the payment of these. Luckily large scale damages are few and far between.
Sasha: “It’s beneficial to have written terms in the tenancy agreement prohibiting damage to the property and that any damage must be rectified within a reasonable period or damages are paid to the landlord within 14 days to rectify the damage.”
What can a landlord do if neighbours make noise complaints?
Helen: “It’s important to have all relevant clauses in the tenancy in respect of noise and nuisance. If the tenant is in breach of this, the landlord should report it to the council environmental officer and serve a section 8 notice.”
Charlotte: “If a neighbour complains to us we would usually recommend in the first instance they go and speak to our tenants. Nine times out of 10 they don’t realise how sound is travelling or that it’s causing an issue for their neighbours and a friendly chat sorts it out. If, after speaking to the tenants the issues continue, we are happy to intervene and formally contact the tenants about the disturbances. We also recommend that a log is kept of the dates and times of the disturbance so that, if required, they can escalate the matter further to the council who have far greater power to deal with issues such as this.”
Sasha: “A landlord can advise neighbours to contact the police regarding noise complaints. Case law has set out that the word ‘neighbours’ includes anyone who resides sufficiently close to the tenant to be affected by the tenants’ anti-social behaviour and isn’t limited to those living next door. Therefore, a landlord can rely on witnesses who may be affected by the tenant’s conduct inside and outside of the property. Case law has also set out that where there is evidence to suggest the tenants’ behaviour would recur, the courts should be inclined to grant the landlord an outright possession order.”
Many students won’t be living in the accommodation for the entire year, how can a landlord prepare for this?
Helen: “Ensure the insurance policy covers periods of voids or empty property.”
Chris: “Some landlords agree to tenancies over a shorter period to take this into account, but it is ultimately down to landlords and tenants to agree on a tenancy that suits both parties.”
Charlotte: “We run full 52-week contracts on our properties and all of our tenants are required under their tenancy agreement to notify us if the property will be empty for more than seven days.
“With students, you are also less likely to get long-term tenants whereas a number of our professional tenants have been with us for four years and above so you have to factor in not only the cost of re-advertising the properties but also the admin of signing up new groups each year, taking and registering deposits, and completing inventories etc.”
Sasha: “Landlords should consider building a relationship with a local agent to minimise void periods through the year.”
If a tenant changes their mind after signing the contract, whose responsibility is it to find a replacement?
Charlotte: “If they’ve signed an individual tenancy agreement it would be the tenant’s responsibility. In the event they didn’t find a replacement, they’d be responsible for the property and rent due from the commencement of the agreement. “If they’ve signed a joint tenancy agreement it’s really helpful for all parties to help find a replacement as everyone needs to be happy with the tenant found. Should a replacement tenant not be found we would go to that tenant and their guarantor in the first instance. If we’re unable to obtain payment from them, it would then fall on all the other tenants to cover any rent due. “If they’re struggling to find a replacement tenant, as the landlord, we would happily help them advertise the room via our resources but when tenants are looking themselves they tend to find a better fit for their house.”
How can the high tenant turnover rate with student houses affect landlords?
Chris: “It’s bad for income security and can increase risk. However, the student market tends to be considered a distinct sub-market where churn is less of an issue. Landlords in a defined student area can be relatively sure of continued demand, they’re unlikely to be put off.”
Charlotte: “I think with student accommodation we’re quite used to a high turnover rate with most groups only ever staying one to two years depending on their courses. The downside of this is we often lose really lovely groups who look after the properties but, on the upside, if we have a group who don’t look after the property they only stay for a year. But it does mean advertising costs are quite high as you need to advertise the properties annually.”
Sasha: “This can, in some cases, result in more damage to the properties with tenants frequently moving things in and out of the premises.”
How involved should landlords be when it comes to paying utility bills?
Chris: “Most landlords don’t include utilities [in rent payments] but it’s not that uncommon. If the contract for supply is between the tenant and the utility provider, there’s no reason for the landlord to become involved. Likewise, there’s no reason for the landlord to include anything in the tenancy agreement beyond confirmation of who’s responsible for what. “If landlords include utilities in the rent then it will not be itemised, as such late payments should be treated in the same way as any rent arrears.”
Charlotte: “I think it’s become commonplace over the last few years for landlords to offer bills included in the rent. When we have previously offered this, we wrote a utility allowance into the tenancy agreement and only charged tenants when they went over this which was very rare. Going forward, we are looking at using external companies to manage the utilities such as Split The Bills as it makes life much easier for us.”
Ashley: “Including bills in the tenancy agreement is a huge perk for many students as it provides convenience and reduces the stress of organising utilities. While this can attract tenants, it creates more work for the landlord. However, some bill-splitting companies can set up all the utility services and add all the costs into one payment which is charged directly to the landlord.
“If the landlord doesn’t want any involvement with the bills, they can refer us to the tenants and earn a commission. We can then divide all payments to one cost per tenant and chase them individually if they don’t meet the payments.”
Helen: “If the landlord wants the tenants to pay a portion of utilities in addition to the rent, this must be stipulated in the tenancy agreement properly and clearly written leaving no room for contention.”
Are there any different responsibilities for landlords of student accommodation?
Charlotte: “As student accommodation tends to deal with groups of unrelated people a lot of our properties need to have HMO licences which means the properties are better regulated particularly in terms of fire safety, health and safety etc.
“In terms of general responsibility, I feel there’s a duty of care with our student tenants as it’s many of their first times away from home and living alone.”
Chris: “It’s much more likely that a student household will have never lived independently before and may not fully understand their responsibilities. As a consequence, there can be an expectation that the landlord will play a much more hands-on role than they should. It’s very common to find student tenants unsure about simple household tasks like changing light bulbs, unblocking drains, or mowing the grass. However, most of these can be dealt with simply by providing user guides for household appliances or installations, or reminders about domestic matters like when to put the bins out.”
Is it beneficial for a landlord to work with a letting agency when renting to students?
Chris: “It very much depends on the circumstances. Letting to students can be time-consuming as management can be more intensive. If the landlord isn’t local or doesn’t have time to commit to management then an agent can be beneficial. However, it isn’t essential.”
Charlotte: “We own all our properties and don’t manage for third parties but I think working with a letting agency takes a bit of the pressure off the landlord when it comes to securing tenants for the upcoming academic year. An agency will most likely have accounts with multiple advertising platforms to reach a bigger market.”
Sasha: “Landlords can benefit from using a competent letting agent to ensure the check-ins and check-outs are completed correctly and to deal with the day-to-day management of the let premises.”
Ashley: “We work with multiple letting agents and manage the bills of their properties. This means the landlords don’t need to deal with the admin involved with utility payments, so they can focus on other duties instead.” There are multiple considerations landlords of student properties should keep in mind to ensure that, should any difficulties arise, they are equipped with possible solutions.