When managed effectively, student rentals can yield excellent returns. Here are five great suggestions for ensuring that your student rentals are lucrative.

All landlords want to see a return on their investment, and this is no different with student rentals. According to Paragon Bank’s analysis, the average gross income of landlords has consistently increased from 5.62% in September 2020 to 6.66% in September 2023.

Except for the pandemic, which compelled students to study from home, demand remains consistent, making student-lets an appealing avenue to focus on. The demand for student housing is approximately 1.5 million, with 96.4% of students actively seeking accommodation.

Students prefer to pay in bulk for their loans, which might benefit a landlord’s cash flow. Furthermore, agents can advise their landlords on additional procedures to take to ensure that their student rentals are more profitable.

Here are five recommendations to help landlords generate revenue for student rentals:

• Choose the right property
• Market it well ahead of time
• Make the most of the summer holidays
• Renovate to offer quality
• Have an in-depth inventory

Choose the right property

The first step towards profiting from student rentals is to guarantee that letting agents advise landlords on obtaining the appropriate property in the first place.

Location, as always, is important, and properties near the university are always in demand. Outside of the well-known student towns, it may be interesting to investigate whether there are any unofficial student areas in the city, particularly near secondary institutions.

Paragon Bank discovered that smaller university towns and cities are becoming the best places for student rental yields. Stoke-on-Trent, home of Staffordshire University, with a rental yield of 9.42% in 2023 and an average yearly rental income of £13,730.

Traditionally, students are unlikely to want the work of maintaining a garden, thus properties with a simple garden may be at the top of their list. Look into the most recent student trends in your area and find a property that meets all those requirements.

Market it well ahead of time

The demand for student housing fluctuates in waves, which is ideal for determining when to sell the property. It also allows landlords to ensure that they have accepted the next student before the previous one leaves. Contracts can be signed more earlier than in the private rental sector, with landlords aiming to renew current students by December for the summer, for example.

If you can get universities to help promote your properties to their students, you’ll be a popular choice for new tenants when the current batch leaves. Promotion from the institution will contribute to the development of trust between student tenants and landlords.

All of this will reduce void times for landlords, or at least give them time to prepare and plan if there is a gap between tenants.

Make the most of summer holidays

The summer holidays are the most likely time of year for a void period. The average vacancy period in August 2023 was 13 days. For student rentals, vacancy periods are at risk over the summer months when students do not occupy the property – even if they intend to return for the following term. However, there are methods around this.

Some students may be searching for a place they can stay in for a few years, and moving out during the summer would be inconvenient, therefore letting agents may consider giving a 52-week term.

Another option is to give a reduced rent over the summer, knowing that they will return to their families during that time, with the caveat that letting agencies or the landlord have access to the property to refurbish or perform any necessary maintenance.

If the tenant wishes to vacate the home fully over the summer, consider promoting it to students on summer courses – or, if you live in a tourist area, try a short vacation rental.

Renovate to offer quality

Students typically search for purpose-built accommodation since it meets their special needs. Buy-to-let landlords can examine many options for keeping up, including remodelling. Landlords should strike a balance between necessary upgrades and cosmetic enhancements, keeping an eye on the yield to ensure the property is marketable.

Newer and more inexpensive facilities, such as a boiler or shower, will require less maintenance in the long term, lowering the amount spent in expenses.

You’ll also be able to demand greater rentals as the quality improves, which is consistent with the market average. Like the rent-price increase in the private renting market, the 2023/24 academic year “has seen record rental growth of 8.02%,” implying that the rent available for student leases can be higher if the necessary amenities are available.

Have an in-depth inventory

If property damage must be deducted from the security deposit, ensure that the original inventory accurately explains the state of everything from the beginning of the rental.

Deposit issues are best avoided for everyone involved, and having a precise inventory helps facilitate discussions and assist a landlord’s property remains profitable.

You could also recommend contents and liability insurance to your tenants. This would assist to reassure them that their personal possessions are safe, and with responsibility included, they would have better piece of mind if they damaged any of the landlords’ fixtures and fittings.

By implementing these recommendations, letting agencies can effectively support landlords in optimizing revenue from student rental properties, thereby fostering long-term financial success and sustainability.

Author: Jag Chaggar