Investing into student buy-to-let property can prove as an attractive prospect for many people. Whilst the benefits are many, there are several things to consider when finding, purchasing and managing your first buy-to-let property.
By following this simple guide, you can prepare to become a student landlord, minimise the traps and begin establishing your student property empire.
1. Landlord expenses
Once you’ve forecasted roughly how much rental income you could earn, you should work out whether you’re likely to make a profit by calculating your expenses as a student landlord.
When calculating your landlord expenses, we recommended considering all costs – including creating a contingency fund to be set aside in case of any unforeseen costs which exceed what you are expecting.
1.1 Mortgage costs
If you’ve already purchased your student buy-to-let property, you will already know that the majority of your monthly outgoings will be mortgage repayments. It might be a little late for those who have already purchased a property, but if you’re still trawling the market, we recommend putting down a deposit of 40% or more of the property value for the best mortgage rates.
1.2 Maintenance costs
Unfortunately, there’s not really an exact science to calculating how much you’re likely to spend on property maintenance. From our experience, keeping on top of maintenance with little-but-frequent fixes will help reduce costs in the long term. We recommend carrying out maintenance checks every three months and fixing any problems.
Student landlords should expect to spend upwards of £250 per year on maintenance for minor repairs.
1.3 Refurbishment costs
Every few years, you should expect to pay for minor room updates for your student tenants. Whilst they don’t have to be major refurbishments such as refitting a bathroom or kitchen, you should be prepared to pay for functional changes to your property. As a rule of thumb, we recommend spending around £2,000 every five years.
1.4 Void periods
As a student landlord, you might be offering your student tenants 10-month contracts, or half-summer rents. If this is the case, you should factor this into your rental income calculations. We recommend that you should allow for the property to be empty, and not receive any rental income, for at least 8% of the year to account for tenancy changes and repair periods.
As a landlord, you should be prepared for unpaid or late rental payments. In our experience, there can be problems with unpaid rents due to maintenance loan delays; we recommend finding out their loan payments and adjusting your payment dates accordingly.
Students usually receive their student maintenance loan in three lump sums throughout the year; September, January, April.
2. Legal responsibility
As a student landlord, you will have a number of responsibilities towards your student tenants.
2.1 Rental deposits
As a student landlord, you must place your student tenants’ rental deposits into a UK government approved deposit protection scheme. At the end of the tenancy, deposits should be returned in full, unless there are deposit disputes regarding damage to the property or unpaid rent.
2.2 Maintenance and repairs
Landlords are responsible for the structure and exterior of the rental property. Any problems with the exterior doors, windows, roof, chimney, guttering or walls are the responsibility of the landlord.
Landlords are also responsible for ensuring all the equipment supplying water, gas and electricity is in safe working order.
The severity of the repair should warrant how quickly you should respond to a problem. Problems which do not require immediate attention, such as a door falling off a hinge, should not take longer than a week to fix. However, a repair which puts your student tenants in danger requires immediate attention and should be carried out within 24-hours of the problem being reported.
2.3 Safety standards
All landlords must ensure their student property adheres to UK tenancy laws.
It is essential to get a Gas Safety Certificate for each gas appliance in the property to ensure they are safe to use. The landlord must arrange a gas safety check each year (by a certified Gas Safety engineer) to ensure the appliances using gas are in good working order.
Landlords should also keep a record of the engineer’s report and are obliged to share it with the tenants if requested.
Electrical devices supplied by the landlord do not require safety checks, but we recommend carrying out a Portable Appliance Test (PAT) on all the electrical equipment inside the property to ensure that you’re compliant with safety standards.
All landlords in the UK must ensure the rental property is fitted with smoke alarms on each floor of the property and carbon monoxide detectors in rooms with a coal fire or wood burning stove.
It’s a legal requirement for landlords to display a valid Energy Performance Check (EPC) before you let-out your student rental property.
3. Decorating and furnishing your property
Getting the right decor and furnishings may not increase the rental value of your property, but can improve your chances of securing a tenant.
As a general rule, neutral colours are the best way to go as they will easily go with most furniture and will appeal to more people (and it’s usually cheaper!). We recommend choosing paint with a satin finish so that it’s easier to clean at the end of the tenancy.
If you would like to find out more about what students look for when searching for a rental property, check out our top 5 student tenant requests.
Tip: Check out our new tenant checklist to ensure your property is prepared for the next wave of student tenants.