Letting To Students

One potential source of tenants for residential landlords is the student market; particularly in university towns or those with colleges of further education. The proposed increase in student fees could result in a temporary reduction in student numbers, but this is unlikely, because the fees � even at 9,000 a year in many cases � will not be repayable until graduates start work and even then only when earnings exceed 21,000 a year. Many are likely simply to see this as a graduate tax, which is by no means a unique idea.

Are there special risks?
Whatever we may think about young people generally; untidy, irresponsible, pleasure-bent and so on, it is fair to say that such stereotypes are unlikely to be representative of the large majority of those prepared to invest in their future careers by obtaining a higher education. And even if there is an element of being �let off the leash’ for the first time, when leaving home, this need not make them poor potential tenants.

In fact, the increase in tuition fees could actually help some young people to focus more on the need to work hard and less on spending time enjoying themselves (not that there is anything wrong with that, within reason). Conversely, landlords, especially those without landlord insurance may consider that exercising greater vigilance over the condition of their property could pay dividends in terms of not having to undertake so much decorating or repair work at the end of the academic year!

As with any new tenants, taking references is important (failure to do so could invalidate any rent protection extension to legal expenses insurance) although in the case of students, this could be difficult because there is not employment history and relying on parental circumstances may be more appropriate. Working closely with the student lettings office at the university or college may also help reduce the risk of taking on low quality tenants.

A more predictable income?
One of the potential appeals of student lets is that income is more or less predictable for up to ten months of the year. This may be true, although many colleges have a relatively high dropout rate and these may not all occur at the end of the academic year, so some attrition may be factored into revenue forecasts. To some extent this will apply according to the type of university. Some � like Oxford and Cambridge � may have lower dropout rates and those that do arise will come at the end of the academic term when students fail exams and are sent down. Where the prestige of the educational institution is lower, dropouts may occur more randomly.

Getting the right advice
It is important to seek independent professional advice before making any decision about your property owners’ property and liability insurance as well as your financial obligations. You should always ask your insurance advisers what experience they have of dealing with residential and/or commercial rental property insurance.

Nothing contained in the article should be considered as giving individual financial advice. Please note that there may be variations for those living in or letting property located in Scotland and Northern Ireland.

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