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> Why
Students Make Great Tenants |
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Article kindly provided by Peter Scully
www.sf-media.co.uk |
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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.
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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.
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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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