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Sean’s August blog: Student lets

Since I was a student, over 30 years ago, the University sector has grown massively and the number of students currently in full time education is around the two million mark! Given that all these students need a place to live, and campus and halls of residence accommodation cannot satisfy demand, most students will be looking at “digs” as their preferred form of tenure. While living at home and commuting to college is now also common place, the reality is that most students at some stage in their studies will enter the private rented sector.

In order to meet the demand, the large student accommodation providers are rushing to build purpose designed student residences, often in huge city centre high rise developments, but the shared house owned and run by a private landlord is still the norm in the industry.

Given this situation, the annual process of accommodating everyone is a huge logistical and stressful time, and each year the rush to secure the “best” accommodation appears to get earlier and earlier. This early reservation of properties causes unique challenges to the sector and of course the potential for complaints becomes acute.

A few years back, I visited an agent in Durham during this mad period, and saw queues of students with wads of cash in hand, waiting to pay over reservation fees or tenancy deposits for the properties of their choice. This agent had it down to a tee, with proper receipts, terms and conditions - and every student was seen face to face to be explained their commitments. The agent opened from early morning to late into the evening to get through the numbers and to ensure they did everything by the letter. This diligence paid off, as they had a fantastic reputation in the city and no doubt that attracted even more custom.

The secret to getting the student sector right is preparation. It is a highly competitive market, but do not cut corners in doing things correctly. Below are seven tips that can help:


  1. Before taking a property on, make sure that it fully complies with the law. Here are some things to look out for: Does the property have the correct planning permission to be student accommodation and does it meet the current building regulations? Is the property required to have a House of Multiple Occupancy license and if so have all the conditions stipulated in this been met? Is the property in an area where additional or selective licensing is required? Many cities and towns have imposed these additional requirements in the areas particularly heavily populated by students, and these obligations cover a wide range of responsibilities. Is the property safe? Have the requisite checks been done? Gas Safety? Electrical Safety? PAT tests? Legionnaires and asbestos checks? Are the correct fire and carbon monoxide provisions in place?EPCs are now well established, but what about Green Deal provisions that may be in place and affect the energy bills? Finally avoid the bane of the rented property, damp and mould, and ensure that fans, airbricks and ventilation is adequate. A lot of work before you get started, however an advantage to doing this is that it could mean you can get on to a local accredited or approved agent list that some universities have set up.


  2. Have clear processes for how to deal with the letting. Student accommodation presents a particularly challenging environment as the potential tenants often are not available to undertake viewings or to have face to face meetings. Overseas students also present a dilemma as they almost always arrange things remotely.


    The thorny issue of reservation fees should be clearly dealt with, so ensure that you clearly set out the criteria under which deductions will be made from this. Remember, it is not fair to have a blanket no-refund clause in your holding deposit agreement and with student lets, the holding deposit is usually taken months in advance of the student occupying the property. If they pull out then you may have a reasonable chance of re-letting the property, so be prepared to be flexible with individual circumstance. Of course you may legitimately incur costs if a student cancels, so clearly lay out what these are and be prepared to demonstrate your loss.


  3. Remember that for many students, this is the first time they will have lived away from home. They will be looking forward with both trepidation and excitement to their first taste of independence. This means that they may not totally absorb all the important information they need to understand when they make the commitment to let. Ensure therefore that you explain as clearly as possible their obligations and you tell them and then remind them again just before they take up residency.


    In particular make it clear what their responsibilities are in regard to joint and several arrangements and what you expect where there are common parts. These issues are always contentious where complete strangers are expected to live in a communal environment.


    Overall, document everything!


  4. Ensure you manage the relationship with any third party. Many students rely on parents to pay deposits up front and to act as guarantors. It is therefore not surprising that when things go wrong, it is the mum or dad who comes knocking on your door. Of course, in the guarantor scenario, it may well be you who is approaching them! If this is the case, then make sure that you have your ducks lined up, as it likely that the apple of their eye has spun a totally different story to the reality.


    Again, good process and documentation is essential but often the temptation is to short cut these due to the pressures of managing large numbers of students all at once. As professionals, the onus will be on you to ensure that all procedures are adhered to and consumer law can be brutal if you miss out a vital step.


  5. Protect your landlord and yourself. Do not skimp on references and this includes any potential guarantor. Few students have a credit history or previous rental history, so are unknown quantities. Getting a good quality guarantor is important. Overseas students are especially tricky, as any guarantor will usually be beyond your reach if you need to try and recover any losses. A common way of resolving this is to take advanced rent, however this needs to be carefully considered, as there are other problems that could arise from this, such as money laundering considerations. You will also now have to consider your obligations under Right to Rent. There are insurance schemes that specialise in protection for renting to foreign students and it may well be worth looking at these for this riskier but lucrative market. Check whether the universities you serve have any schemes or penalties for bad behaviour by their students, but remember many local authorities now hold landlords and agents liable for the anti-social behaviour of their student tenants.


  6. When it comes to the students actually moving in and out of the property, meticulous planning will be essential. The timings of the mass move in or move out can be a logistical nightmare. Remember that whilst the many student properties will not be occupied after the end of the academic year, many student tenancies run up to the beginning of the following academic year. Legally therefore you cannot have vacant possession until the expiry of the tenancy. Sometimes you can make an arrangement to check-out the previous students early, but this will not always be the case.

    Best practice would be for some form of pre-checkout provision being in place to ensure the students know their obligations. This commonly takes the form of a letter informing the tenants what they need to do before checking out, but even better is a pre-end of tenancy inspection. Clearly lay out any charges that the tenants may incur and what they should do with rubbish and personal possessions. If some tenants leave before the others in a shared house, then emphasise the joint and several obligations and be prepared to be flexible.

    I always recommend that a robust check out is undertaken at the end of the tenancy, but I know some student providers play the numbers game. That is up to you but remember that especially if you take a deposit, the Tenancy Deposit Schemes show no mercy in awarding in the tenant’s favour if you do not provide evidence of the condition of the property before or after the tenancy. Self-check in and check-out could therefore cost you dear.


  7. Finally, remember who your customer is. Make sure you rent out a property suitable for their needs. Easy to clean appliances, hardwearing carpets, and enhanced ventilation to avoid mould are all practical ways of ensuring that the property is student proofed and will mitigate any potential losses to everyone. Regular inspections and clear rules for reporting repairs are essential and always clearly lay out any charges that may be levied against the student. Manage the expectations of your landlord and always keep good records.

This is just an overview of the pitfalls when letting to students, but if you put in the work the rewards for both yourself and your landlords are huge.




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