Owning Student accommodation can be a profitable property investment with potentially excellent returns on capital outlay.
Here at DC Lane estate agents in Plymouth, we have seen a recent upturn in interest from modern BTL investors looking for a solid mid-term investment.
With a large and successful university together with other local higher education colleges, the student population is circa 25,000. The plentiful influx of young people swells the city every September with a palpable increase in tempo that adds to the City’s reputation of having a great nightlife!
There has certainly been a consolidation in the number of traditional student houses as large modern blocks or ‘halls’ have been recently developed, luring some students away from the more traditional housing stock. However there remains a considerable core of young’uns who prefer the experience of living with friends while learning the life skills needed to look after a home for the future.
WHAT SHOULD YOU EXPECT?
Becoming a student Landlord is not for the faint hearted, with a wide set of skills needed from health & safety risk assessor, parent, politician, and some-time enforcer. If self-managing, be prepared for a time-consuming role with periods of stress and time intense remedial works in a short summer void – You’ll need a paint roller and steam cleaner to hand!
With quite significant competition, only those houses close to the campus are reasonably guaranteed high occupancy levels. Think max 10 minute walk…
5-bedroom houses are currently the most popular with Landlords and students – larger can also be excellent buys, but be aware of the potential for more expensive finance and the smallest rooms can be a challenge to fill.
Most students will want bills included to keep their life simple. This is easily arranged and your agreements can include ‘caps’ to ensure that unreasonable energy consumption does not disadvantage the Landlord.
Our current students do expect clean and modern décor, en-suite facilities are always more popular and the internet MUST be fast! Houses that are out of date or have dog-eared decor will be last to let, and often at lower yields.
MARKETING & INCOME
Properties to let for students are often marketed as early as October for the following year, and if not let by late January, action should be taken to avoid a potential void for next September. We see local room rates including bills range from £110 PPPW through to £80 PPPW.
This can vary based on the size, location, and capital growth potential. We would be pleased to talk you through these numbers by calling our office!
HMO LICENSES & PLANNING RULES*
This is one area that causes quite significant concern and is regularly misunderstood. In certain areas of Plymouth where you may wish to buy a student property, a local Article 4 direction came into force on the 14th September 2012. From this date, where there was an intention to allow more than 4 people to occupy a premises in 2 or more households (Class 4 HMO) the owner must seek planning permission for change of use. Houses let as C4 HMO’s prior to this date need not apply. It may be necessary to prove continual letting since September 2012 as a C4 in some circumstances. There is now also the requirement to obtain and hold a valid HMO licence. The licence and planning designation are separate requirements and are not necessarily mutually assured, ie there is no guarantee that a property with a current HMO license has the required planning consent. If you are thinking of buying or selling a student HMO, make sure you speak with our experts so that we can help you to check the correct permissions are likely to be in place. For those of you who fancy looking through the rules, follow this link to the council website..
HEALTH AND SAFETY
As young adults who have not yet had significant experience of living away from home, student are considered as vulnerable people, therefore the health and safety elements of Student letting should be very carefully considered, with best practice followed at all times. HMO Licenses will spell out many requirements, but we would strongly recommend any first time Student Landlords consider using a professional management service, or at the least take professional advice when considering these elements of the let. Responsible Landlords must be cognisant of their responsibilities for the safety of their tenants, as well as their statutory and contractual obligations.
Looking after your students and nurturing a positive relationship will bear fruit, as social media allows the sharing of experiences quickly and effectively. A house, Landlord or agent with a poor reputation online will find it very hard to fill rooms…
HOW TO FIND A GREAT STUDENT HOUSE
Here are DC Lane Sales & Lettings, we have significant experience of dealing with student HMO’s, and often have a selection of great houses to view and buy. please contact the team to discuss your requirements.