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BLOG: The top five reasons to let to students

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18/10/2013
The private rental sector is growing faster than any other form of housing tenure, but landlords may be missing a trick by overlooking students.

The private rental sector also accounts for 17% of all UK property stock. 

Around 1.3m private landlords offer accommodation to a vast range of tenant types. The latest landlord research, from research company BDRC, suggests that ‘young couples’ and ‘families with children’ top the list with around 50% of landlords offering accommodation to these groups.

But are there tenants that landlords (and lenders) would prefer not to offer space to? In October we surveyed more than 1,000 landlords and asked if there are types of tenant they prefer not to engage with. The results were enlightening.

While 52% would not let to ‘local housing allowance (LHA) claimants’ and 37% would say no to ‘students’, only 2% would reject a ‘white collar professional’ tenant.

So LHA and students in particular appear to have a poor reputation with private landlords, though not all landlords agree. Indeed, more than one-in-five landlords (22%) are currently active in each tenant sector, clearly indicating that these segments can be made to work profitably and very profitably in many cases.

As a parent of two university aged students I can personally vouch for the dynamics and demand of the student lettings market. Our survey data indicates that the student sector delivers for landlords these top five benefits:

• low voids
• low arrears
• high income levels regardless of property type
• low recourse to legal services
• high profitability.

There are some lessons for lenders here too. I’d suggest there is compelling evidence that this segment in particular offers a better risk profile than some mainstream tenant segments, and that buy-to-let providers inclined to de-select borrowers letting to students may want to reconsider that policy.

Now, where’s my Pot Noodle?

Mark Long is director ofresearch firm BDRC Continental

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