Posted on Friday, February 16, 2018
If you have a property with two or more bedrooms you may have considered whether it is suitable for you to let to sharers, rather than an individual, couple or family. However, many landlords shy away from letting to those sharing the property, be they working professionals or students as they are not aware of the work involved, and how this may differ to a traditional tenancy.
Student Haus explores the benefits and pitfalls of renting to students, and what landlords need to be aware of.
The key benefit of renting to sharers is the possibility in an increase of rental yield. For example, a two bedroom property where the rooms are let on an individual basis can see an increase of around 15% on the gross rent payable, meaning increased profits to the landlord. Sharers are generally looking to split the rent based on the number of rooms, meaning that budgets can be a little more flexible than for a single family.
Also, students will generally take on a full year tenancy, with Student Haus aiming to let properties from 1st July to 30th June the following year, meaning that you get a full years tenancy. If the property is well maintained and in an area attractive to students, landlords are unlikely to see extended void periods.
Firstly before choosing to take on sharers within your property, it is wise to ascertain whether you will require a HMO licence. Whether your property is let to multiple tenants on a room by room basis, or as a collective you may still require a licence. There are two types of licence, a mandatory HMO licence for any property which has three stories or more, and have five or more people sharing facilities. This is a requirement that is regulated under the Housing Act and ensures certain standards of both the property, and the landlord.
Selective HMO licences are discretionary and cover HMO’s which don’t fall into the category described above. These have been introduced by local authorities to ensure certain safety standards and security for tenants. Therefore even if your property does not meet the requirement for mandatory licencing, check with your local authority about the regulations within your area.
As all tenants have signed one assured shorthold tenancy agreement, they are jointly and severally liable for the rent or finding a replacement tenant. Student Haus can assist in the administration of this.
Your tenant’s deposit must be protected by law. While different tenant deposit schemes work slightly differently, one staple of advice remains the same. Best practice is to draw up a new tenancy agreement, and the portion of the deposit is taken from the new tenant, with the proportion given back to the outgoing tenant. Here at Student Haus, we protect tenants deposit in the Deposit Protection Scheme (DPS), who always advise to draw up a new agreement.
While there can be little more work involved in letting your property to sharers, the benefits of reduced void loss, combined with potentially higher rental yields is a good enough incentive for many landlords to consider sharers. Using an expert management agency like Student Haus will ensure that the process of letting to sharers is just as easy as a single let. Find out more about how we help landlords to let to student sharers.