Landlords who are open minded about tenant turnover and increased wear and tear have usually been rewarded when renting to students. One big benefit has been the higher yields that can be achieved when running a student let, compared to the non-student private rental sector.

In fact, consumer insight firm BVA BDRC found that in 2020, there was a 1% difference in the mean rental yield from student and non-student letting portfolios, while Aspen Woolf found the flexibility of student accommodation, such as letting individual rooms, can bring yields of between 8% and 20%.

Student lets can bring issues

Although high yields are attractive, landlords can run into issues when renting to students. In a 2022 study, the Tenancy Deposit Scheme (TDS) discovered that 88% of landlords renting to students had to withhold some of the deposit. This was for a range of reasons, including damage to property, claims for cleaning, redecoration costs and rent arrears. Whilst landlords are partially compensated, the cost of remedial work often dwarfs the tenancy deposit, while they also have the hassle of organising cleaners, decorators and tradespeople to reverse the issues before they can re-let.

New Bill to shake up the student let sector

The forthcoming Renters’ Reform Bill is set to further threaten private landlords and even spell the end of their time in the student rental sector.

The Bill proposes removing fixed-term contracts, instead replacing them with rolling periodic tenancy agreements that would offer tenants greater security and flexibility. For landlords, this could severely change the typical annual student let model, allowing undergraduates to stay on after their academic years ends or even after they graduate. This would make it harder for landlords to find new tenants partway through the academic year should incumbent students suddenly leave, with most already settled in accommodation.

Wider financial impacts on landlords

The Bill’s rental reforms are coming at a time of higher mortgage rates and falling house prices, meaning that landlords of student accommodation may find they cannot cover their costs or that their yields drop.

Base rates have increased for the 14th time in a row and are the highest in 15 years, pushing up the cost of buy-to-let mortgages. Things are not likely to improve in the short term either, with the Bank of England predicting that interest rates will remain high for another two years. As a result, many landlords are finding they can’t afford mortgage repayments and are having to make difficult decisions about their property portfolios.

Sell your student let to LandlordBuyer

If you are a landlord who can’t get their student lets to balance the books or you don’t like what’s contained in the Renters’ Reform Bill, you can exit the student market with a direct, fast sale to LandlordBuyer. There’s no need to evict students, who can continue to live in the property without disruption. LandlordBuyer will purchase apartments, student house shares and buy-to-let portfolios. Contact us now for your free no-obligation valuation.

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