Jul 8, 2020

Letting to Students: Common Problems and How to Avoid Them

With over 2 million students in higher education in 2018/19, it’s safe to say the student housing market is pretty big. Students make excellent tenants but there are also things you should consider if you’re just venturing into becoming a student landlord.

For many students the student house will be their first time venturing into the renting world and due to this problems and mis-understandings can occur. To help landlords thinking about entering or who are new to the student letting market, experts in this field shared their advice on how to deal with the most common problems.

Receiving Rent Late

Late rent payment is the most common problem that landlords face when letting to students. A simple explanation as to why students may struggle to pay their rent on time is because their student loans often come in late so being a bit more flexible could help.

Sasha Charles, lawyer at Landlord Advice UK, shares what you can do if a tenant does not pay their rent on time over a prolonged period of time: “A landlord can consider serving the tenant with notice, commonly a section 8 notice under the Housing Act 1988, and demand outstanding rent is paid within 14 days or otherwise face a possible repossession via the courts.”

The most common way to prevent a recurring issue of late rent payments is to obtain a guarantor. Chris Norris, Director of policy and practice at National Landlords Association, explains: “When letting to students, it’s usually difficult, if not impossible, to obtain previous landlord references and assurances that the prospective tenant’s income will be sufficient to cover the rent. As a result, it’s common practice to require the tenant to provide a guarantor who, in the event of missed payments, will be responsible for the rent.”

Dealing with Damage

Of course, this is a worry whether you’re renting to students or professionals. However, it’s more likely that students will be less cautious about causing damage to property. While wear and tear is expected and should be taken lightly, any damage exceeding this should be deducted from the tenant’s initial deposit – a well-detailed inventory should be done before tenants move in so it’s clear on the damage that was done whilst they were residing.

Charlotte Daniels, Letting manager at Home Accommodation, explains: “What is considered to be fair wear and tear or damage should be set out in the tenancy agreement and copies of invoices for the work should always be provided to show only the repair/replacement of goods is being charged for and no additional charges are being levied. In the event there are large scale damages, our tenants may have to look at their insurance to help with the payment of these. Luckily large scale damages are few and far between.”

Preparing for Periods of Emptiness

Most students tend to go home during the Christmas and summer breaks, meaning the property could be empty for a month or so. This may be a worry for landlords but there are some ways to prepare for this – one being offering shorter contracts.

Helen Cartwright, media manager at the British Landlords Association, advises: “Ensure the insurance policy covers periods of voids or empty property.”

Sasha adds: “Landlords should consider building a relationship with a local agent to minimise void periods through the year.”

Finding a Replacement

Sometimes, a tenant may want to back out last minute after already signing a contract. In this situation, it is down to the tenant to find a replacement. If they can’t, their rent will have to be paid by either their guarantor or the other tenants, depending on whether the contract is a joint tenancy agreement or an individual one.

Charlotte explains: “If they’re struggling to find a replacement tenant, as the landlord, we would happily help them advertise the room via our resources but when tenants are looking themselves they tend to find a better fit for their house.”

Noisy Neighbours

Students love to party so noise complaints are to be expected in many cases – even if it was simply all tenants having a drink together before a night out, things can get loud. While some neighbours may sort it out amongst themselves, which most landlords would ask them to in the first instance, this sometimes doesn’t work out.

Sasha explains what landlords can do if things are getting out of hand: “A landlord can advise neighbours to contact the police regarding noise complaints. Case law has set out that the word ‘neighbours’ includes anyone who resides sufficiently close to the tenant to be affected by the tenants’ anti-social behaviour and isn’t limited to those living next door. Therefore, a landlord can rely on witnesses who may be affected by the tenant’s conduct inside and outside of the property.”

Helen comments: “It’s important to have all relevant clauses in the tenancy in respect of noise and nuisance. If the tenant is in breach of this, the landlord should report it to the council environmental officer and serve a section 8 notice.”

Utility Bills

Some landlords choose to have all-inclusive tenancies, this is a rent agreement that covers utility bills. This type of contract has become a popular choice for students over the years as it’s an easy option for them.

Ashley Tate, chief executive officer at Split The Bills, explains: “Including bills in the tenancy agreement is a huge perk for many students as it provides convenience and reduces the stress of organising utilities. While this can attract tenants, it creates more work for the landlord. However, some bill-splitting companies can set up all the utility services and add all the costs into one payment which is charged directly to the landlord.”

Of course, landlords don’t have to include bills if they don’t want to – students can sort them out themselves. However, dealing with bills for the first time may be overwhelming for tenants, meaning they may look elsewhere if it is not offered.

Ashley mentions: “If the landlord doesn’t want any involvement with the bills, they can refer us to the tenants and earn a commission. We can then divide all payments to one cost per tenant and chase them individually if they don’t meet the payments.”

High-tenant Turnover Rate

Student properties tend to have a high turnover rate due to them moving on often – it’s rare to see a tenant stay for more than a year or two. This can negatively affect your cash flow due to costs involved with readvertising, more background checks, and other admin tasks.

However, it isn’t all doom and gloom. Chris explains: “The student market tends to be considered a distinct sub-market where churn is less of an issue. Landlords in a defined student area can be relatively sure of continued demand, they’re unlikely to be put off.”

Charlotte adds: “On the upside if we have a group who don’t look after the property they only stay for a year.”

Working with a Letting Agency

It is completely up to the landlord if they would like to work with a letting agency or not. However, there can be a lot of work involved with student lettings and it can be very time-consuming.

Chris said: “Letting to students can be time-consuming as management can be more intensive. If the landlord isn’t local or doesn’t have time to commit to management then an agent can be beneficial. However, it isn’t essential.”

Ashley concludes: “We work with multiple letting agents and manage the bills of their properties. This means the landlords don’t need to deal with the admin involved with utility payments, so they can focus on other duties instead.”

While letting properties to students might seem like a lot of work which could have many problems, there are also rewards to doing so and precautions you can take to prevent these issues from arising or escalating.