Research from Simple Land Lord Insurance has shown that landlords may be missing out on some of the highest rental yields in the property market. It has become clear that only 1 in 5 landlords are willing to rent to students, but should student housing be your next property investment? The research has shown that the average yield for student properties is 33% higher than non-student properties in the same area.
Why landlords should consider renting to students
There is a growing demand for student properties. With over 2.3 million students in higher education, the market is a strong proposition for landlords. Many landlords have developed the assumption that there are risks involved in renting to students such as high arrear rates or even damage to property. The reality is very different – students are often a safer bet than young families or professionals. Richard Lambert, chief executive of the National Landlords Association (NLA), says: “While letting to students is not for everyone, those who do would be surprised by these findings, because student lets offer the highest rental yields and are least likely to experience rental arrears compared to other tenants, such as professionals, couples, or families.”
When renting to the student market, landlords often require 2 guarantors. This means that in a circumstance where a student is unable to keep up rental payments, the guarantor (usually a parent) is responsible for making up the shortfall. Laura Allen, a MA student from the University of Sussex says: “When I was looking for rental accommodation, so I could start my studies, I was required to provide the landlord with 2 guarantors. The process was very quick and simple, and I was able to move into the property only a few weeks later.”
Leon Ifayemi, CEO of SPCE, a student lettings app, said: “With parents acting as guarantors, there’s a very low risk of students not being able to pay rent on time or provide compensation for damages,”.
Choosing the right insurance policy will also give landlords an added level of security. With the property correctly insured and the addition of guarantors makes what may have been perceived as a riskier investment a low risk.
The top 5 Locations that offer the highest yields*:
- Durham (11.53%)
- Warwick (10.25%)
- Manchester (8.4%)
- York (8.24%)
- Sussex (8.19%)
*Figures sourced from simplelandlordinsurance.com
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