The university student rental market has become an increasingly attractive proposition for property managers and landlords in recent years. Rising university enrollment rates and growing demand for quality accommodation near campus means that the student housing sector offers the potential for high yields and consistent occupancy. However, managing student tenants comes with its own unique set of challenges that must be navigated carefully.
Unlike traditional private rentals, student tenants often lack extensive credit histories and steady incomes, presenting a higher perceived risk. At the same time, their seasonal influx and departure patterns, group living dynamics, and specific accommodation preferences require a tailored approach to tenant management. Effective student rental strategies must balance mitigating risks with capitalising on the lucrative opportunities that this market can provide.
How to attract and screen ideal student tenants
Securing the right student tenants is critical for successful property management. Due to limited credit histories and low incomes, university student tenants are often perceived as higher risk, making the screening process essential.
Thorough tenant screening
Begin the screening process by requesting references from the prospective tenant's previous landlords, if they have any. This may provide valuable insights into their rental history, payment reliability, and overall conduct — but know that it’s not a red flag if they don’t have a rental history yet, as they have likely been living with their parents or guardians. Additionally, conducting credit checks on both the tenant and any proposed guarantors can uncover potential issues that could impact their ability to pay rent.
Leveraging guarantors
Requiring a guarantor, such as a parent or legal guardian, is an effective way to mitigate risks associated with student tenants. Guarantors are legally bound to cover any outstanding rent or property damages if the student tenant is unable to do so, providing property managers with greater confidence in the tenant's ability to fulfil their obligations.
Understanding Student Preferences
To appeal to desirable student tenants, cater to their unique needs. Location and proximity to the university are paramount, with students typically seeking properties within a 45-minute commute. Furnishing the rental, either fully or partially, can also make it more attractive, as students often lack the resources to acquire their own furnishings. Students also vastly prefer properties with living rooms to those that do not, and properties with bills included.
How to communicate with student tenants
Maintaining clear and consistent communication is a crucial aspect of successfully managing student tenants. This demographic often requires a more proactive and responsive approach to address their unique concerns and ensure a positive rental experience.
The Importance of Clear and Regular Communication
For student tenants, effective communication is paramount. These tenants may be living independently for the first time and may require more guidance and support than their non-student counterparts. Property managers should establish clear communication channels, such as regular check-ins and dedicated points of contact, to address any questions or issues that may arise.
Regularly updating students on important deadlines, such as rent due dates, can help prevent late payments and foster a sense of accountability. Additionally, providing students with information on how to report maintenance concerns or access spare keys can streamline the management process and demonstrate your commitment to addressing their needs.
Leveraging property management software for student tenancies
Implementing robust property management software can significantly enhance communication and collaboration between property managers and student tenants. Digital platforms offer a centralised hub where tenants can report issues and communicate directly with their property manager.
By utilising property management software, students can conveniently access commonly requested details, such as rent payment schedules, utility information, and maintenance request procedures. This level of transparency and accessibility can help reduce the administrative burden on property managers and foster a more positive tenant-landlord relationship.
To unlock the full potential of the student housing market, consider partnering with a dedicated property management software solution like Arthur - book a demo with our team today to discover how our tailored solutions can transform your student rental operations.
Addressing common student tenant concerns and questions
Student tenants often have unique concerns and questions that property managers should be prepared to address. These may include inquiries about bills and utilities, furniture and amenities, security and safety, and the process for addressing maintenance requests or damages — all things which older renters may know already.
Property managers should familiarise themselves with the most common student tenant queries and ensure they have established clear policies and procedures to address them. Providing students with a comprehensive welcome guide or tenant handbook can help streamline the onboarding process and empower them to find the information they need independently.
What are the legal requirements for renting to students?
When managing student rental properties, property managers must navigate a complex web of legal and regulatory requirements to ensure compliance and mitigate risk. From specialised licensing to safety certifications and liability considerations, this aspect of student tenant management requires diligent attention.
HMO licence requirements
Properties rented to multiple unrelated individuals, such as student tenants, are classified as Houses in Multiple Occupation (HMOs). These types of properties are subject to specific licensing requirements that property managers must adhere to.
Obtaining the proper HMO registration is crucial. Failure to comply with HMO regulations can result in hefty fines and even invalidate any potential eviction orders, jeopardising the landlord's ability to regain possession of the premises and let properties in the future.
Electrical safety and other necessary certifications
Beyond HMO licensing, student rental properties must also meet a range of safety and compliance standards. This includes ensuring that the electrical system is properly inspected and certified, as well as obtaining any other relevant certificates, such as gas safety checks.
Maintaining up-to-date documentation and adhering to all applicable regulations is not only a legal requirement but also a critical aspect of providing a safe and habitable living environment for student tenants. Property managers should stay informed of any changes to safety standards and be proactive in ensuring their properties meet the necessary criteria.
Understanding joint and several liability in student tenancies
Many student rental agreements operate under a "joint and several liability" model, where all tenants and their respective guarantors are collectively responsible for the entire rent payment. This means that if one tenant or their guarantor is unable to pay their share, the other tenants and their guarantors are legally obligated to cover the shortfall.
This joint liability arrangement serves as a safeguard for property managers, as it helps to ensure that the full rent amount is paid even if one tenant defaults. However, it also places a significant burden on the student tenants and their guarantors, as they are essentially vouching for each other's financial responsibility.
Property managers should thoroughly explain the implications of joint and several liability to prospective student tenants and their guarantors, ensuring they understand the potential risks and obligations. Offering alternative tenancy models, such as individual liability, may also help to alleviate some of the concerns and make the property more appealing to students.
Handling late rent payments and arrears with student tenants
One of the primary challenges in managing student rental properties is addressing late rent payments and rental arrears. Given the financial constraints and uncertainties that often characterise the student lifestyle, property managers must be proactive and have a well-defined process in place to mitigate the impact of late or non-payment.
Timeline of actions for late rent
When a university student tenant's rent payment is late, property managers should follow a clear timeline of actions to encourage timely payment and avoid the accumulation of arrears.
After the first seven days of late rent, property managers should continue contacting the tenant, documenting all communication, and obtaining any available records of previous rent payments. If there is still no response after 14 days, the property manager should initiate contact with the tenant's guarantor, as they are legally responsible for covering any outstanding charges.
If the rent remains unpaid after 21 days, final written notices should be sent to both the tenant and the guarantor, informing them of the impending legal action if the rent is not settled within a specified timeframe. Under the Housing Act 1988, property managers can then serve a Section 8 notice, paving the way for a possession order from the court if the rent is not paid within the allotted period.
Student housing vs. private rentals
For property managers, the decision between catering to student tenants or targeting the private rental market can be complex. Both sectors offer unique advantages and disadvantages that must be carefully considered to determine the most suitable approach for a given property or portfolio.
Advantages and disadvantages of the student housing market
The student housing market is often seen as a lucrative opportunity, benefiting from consistently high demand due to rising university enrollment rates. Student accommodation typically offers higher rental yields, with properties often being occupied for 9-12 month terms. Additionally, student housing is exempt from council tax, reducing costs for property owners.
However, the student rental market also carries inherent risks, such as the unpredictable nature of student tenants' financial stability and the potential for higher turnover rates. Student tenants frequently lack extensive credit histories and steady incomes, necessitating the use of guarantors to mitigate these risks.
Advantages and disadvantages of the private rental market
The private rental market provides property managers with the opportunity to vet tenants more thoroughly. They can conduct credit checks and obtain references from previous landlords. This can help identify reliable, long-term tenants and reduce the risk of late or non-payment.
Private rentals also offer the potential for longer-term tenancy agreements, providing a more stable income stream for property managers. The flexibility to rent properties either furnished, partially furnished, or unfurnished can also be an advantage in the private market.
Conversely, the private rental market can be more responsive to economic fluctuations, and property managers may face higher administrative burdens, with tenants potentially moving in and out throughout the year, rather than adhering to the calendars of academic years.
Factors to consider when choosing a target tenant demographic
When deciding between the student housing or private rental markets, property managers should consider factors such as the location of the property, the target tenant's preferences, and the property's suitability for each market.
Properties situated close to university buildings or campuses or in student-dense areas are more likely to thrive in the student housing market. Alternatively, properties located in prime commuter or family-friendly neighbourhoods may be better suited for the private rental market.
Additionally, property managers should assess the amenities and features that appeal to each target demographic, such as the inclusion of bills, the provision of furnishings, and the availability of communal areas.
Strategies for navigating market fluctuations and economic changes
Regardless of the target tenant demographic, property managers must be prepared to adapt to market fluctuations and economic changes. In the university student housing market, this may involve strategies such as offering 12-month tenancy agreements to minimise void periods during the summer months.
In the private rental market, property managers should closely monitor economic indicators and be ready to adjust their marketing, pricing, and tenant screening processes accordingly. Maintaining a diverse portfolio that caters to multiple tenant demographics can also help mitigate the risks associated with market changes.
Making the most of student renters
By implementing best practices, leveraging the right tools, and remaining adaptable to market fluctuations, property managers can maximise occupancy rates, minimise financial risks, and foster positive long-term relationships with their student tenants.
To streamline your student rental operations and unlock the full potential of this lucrative market, consider partnering with a dedicated property management software solution like Arthur. Our all-in-one platform is designed to address the specific challenges of the student housing sector, providing features such as seamless tenant onboarding, centralised communication channels, maintenance management, and comprehensive reporting capabilities.
