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Article > Why Students Make Great Tenants

Article kindly provided by Peter Scully


The student property market has a reputation as one of the safest, most secure, yet most profitable forms of investment. In spite of this, many people are wary of taking students as tenants. Indeed, many buy-to-let mortgages include terms that do not allow student tenants. But in truth, these reservations are usually misplaced. Far from being a risk factor, research just a few months ago showed that students in fact make some of the "most reliable" tenants of all.

The study, which was conducted by the National Landlords Association, found that properties let to students are less likely to owe rental arrears, as well as being easier to fill and delivering higher returns. In the year leading up to the study, only 38% of landlords letting properties to students had experienced a missed rental payment. This compares to 59% of landlords whose properties are inhabited by blue collar workers, and 71% who let to recipients of benefits. When it came to paying rent on time, students proved even more reliable than the groups that you might expect to lead the way. They beat out both older couples and families, albeit by narrower margins. 49% of landlords had experienced rental arrears with older couples, and 40% while letting to families.

The study also showed that students had more than reliability to offer. They also bring in some of the highest yields in the property market. Returns from student properties average 6.7%, compared to an average of just 6.1% for the UK property market as a whole. There were also lower vacancy rates among student properties, with under 30% of landlords experiencing vacancies in the three months to the study's release in September 2013.

With these figures considered, it is little wonder that the student property investment opportunities has increased massively in popularity with UK investors over the past few years. Those looking to break into this market should consider their investment very carefully, particularly in terms of location. In general, buy-to-let markets are stronger in cities with prestigious universities – with Oxford and Cambridge unsurprisingly leading the way – or where multiple universities result in a large student population.

However, this does not mean that opportunities only exist around elite universities or major centres of higher education. Most university towns in the UK benefit from strong markets. For example, Bristol, Bath and, especially, Brighton have all seen the cost of buy-to-let student accommodation increasing significantly over recent years.

Carolyn Uphill, chairman of the National Landlords Association and herself a student landlord, had much to say on the subject. She highlighted that letting properties to any market, including students "is not an easy win." However, she said that letting to the student market required strong relationships with tenants, many of whom have not lived away from home before, and that this made the investment rewarding as well as financially profitable.





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