Student property investment continues to be one of the most popular vehicles of choice for investors and financiers all over the world. Home to some of the best universities in the world, the United Kingdom pulls thousands of international students to its shores every year and holds considerable prestige as a place to earn a degree.
As a result of this, student housing demands are high and supply is relatively low – a veritable concoction for high returns for developers and investors. But student housing isn’t without its risks if the investor plans to manage the property themselves – students can be questionable tenants at the best of times!
Social Complaints
Students are known to enjoy the odd drink or two, along with a party every once in a while! As a result of this, you might run into some social complaints from the local community whether it’s late night shenanigans or inappropriate behaviour.
The solution to sidestepping these problems would be to invest in property in a student area, surrounded by other and more tolerant students. If this isn’t possible – then protect the residents around your property by writing conditions into the tenancy contract that cites consequences for rule breakers.
Property Damage
The short-term nature of student tenancies, combined with the free spirit nature of the residents, often results in a more careless attitude towards the property. Whether it’s late nights fuelled by alcohol and stumbling tenants or just a lessened feeling of responsibility, small damage is not uncommon in student lets.
Again, the solution is a solid contract that holds tenants responsible for any and all damage that they cause. Student tenancies, whilst unique, are still tenancies and as such come with the same responsibilities of other rented property.
Late Rent
Late rent is a swings-and-roundabouts subject when it comes to students. The facilitation of estate and letting agents ease the worry of non-payment through landlords and those involved with student housing investment – whilst student loans give investors the perfect opportunity for guaranteed returns. Student loans are often paid on a termly basis, giving the recipients more than enough capital to pay their rent up until their next loan instalment.
For monthly paying renters, the household deposit is normally the primary weapon in guaranteeing receipt of rent. Combined with late payment fees and the possibility of eviction, late payments have become less of a problem. Guarantors make non-payment almost unheard of.
Unpredictable Tenants
Students like to have fun, that’s no secret. They live free lives and are shaping themselves every day, which means that they’re often making decisions that immediately affect their current situation. It’s not a rare occurrence for students to drop out of university, transfer to a different college, go travelling suddenly or move in with other friends. All of these represent risks for the parties of student accommodation investment, so the onus falls to the letting agents to write a joint-responsibility contract.
Students are often responsible for replacing themselves with a new tenant, whilst they pay the rent in the interim. However, a joint responsibility contract is often the better option; as it means the remaining tenants take on the burden. With the collective finances and efforts of the remaining tenants, continued payment is far more likely and tenant replacement too.
