Letting to Students?
Student landlord insurance – things to consider
The buy-to-let market has undergone something of a renaissance in recent years (because first-time-buyers now have to find significant deposits in order to get on the housing ladder). However, over the longer term, letting to students in university towns has often been considered a safe option for landlords. Evidence from the Halifax also suggests that letting in university towns is very profitable as house price rises in these towns has out performed those in other areas. Letting to students brings it’s unique challenges and one of these is selecting the right type of property insurance to make sure that the repair and your financial interest is protected.
Finding the right student landlord insurance
For a start not all insurance companies are keen on student tenants and they may impose higher excesses or charge higher premiums where students are involved. It is absolutely essential to ensure that a landlords property insurer is fully aware of the position if you let to students. This is because many insurers consider that the type of tenant to be a “material fact”. This means that if there is a claim and you have not disclosed this, they can quite legitimately seek to repudiate a claim. So make sure you are up front and honest about your intentions and if you do start letting to students ensure that you inform your landlord insurnace company.
What are a student landlord insurance considerations?
The first thing to be aware of is that many student landlords will let their property as a House in Multiple Occupation (HMO). Insurance cover is likely to be different for HMO properties as the risk profile is different. In essence there tends to be higher risks of fires, etc and this is going to be reflected in the cover and premium.
Students as you are probably aware are keen on student house parties. This could involve your rental property. The student parties I’ve attended at rental properties have involved a fair bit of minor damage to doors coming of hinges and minor breakages. These costs may be covered by the rental deposit although some student landlords will avoid a tenancy deposit altogether. If you are looking at making a claim under your landlords building insurance then you will need to ensure that the excess on your policy is not excessively large. It’s would be no good following a party to find that the damage to your student rental property amounts to £500 but the excess on the insurance is £750 meanng that you are out of pocket to the tune of £500.
Some landlord policies will cover you for sanitary ware damage others wont. Student properties with high levels of occupancy are particular hard on kitchens and sanitary wear so make sure that your policy includes these if possible.
You might want to look at extending your cover by looking at specific cover for blocked drains. Sutdents and student parties are notorious for seeing what items they can get down the toilet.
Is glazing covered in the building insurance. Windows and glass breakages are a more common occurance in a HMO or student property so make sure you are clear about your cover if you are letting to students.
Professional advice for all your property owners’ insurance needs
Ensuring that you have the right landlord’s insurance is essential if you are to be properly protected. Always ask your insurance advisers what experience they have of dealing in this specialised sector.
Things for a landlord to understand
Some landlords might react adversely, based on the fear that student tenants can be irresponsible and thus unreliable as tenants, but in practice this need not be the case, particularly where a landlord can become known to the university accommodation office as a good landlord. This is actually one of the best ways to find tenants, because the university can act as a central clearing house for first years and others who are not necessarily familiar with the area. An alternative is to buy a listing on www.accommodationforstudents.com which can cost as little as £12 a month per property.
In fact, students can be good tenants because you know they are with you for a fixed period, usually early September to June, although some may reserve accommodation as early as August, if they are “freshers” (first year students).
A landlord will need to provide basic furnishing including: a bed and desk (and hopefully a chair) but other than that there are few restrictions.
If a landlord is interested in this area of letting, because of the availability of large numbers of potential tenants but are not fully committed to having your property full of undergraduates, a landlord might consider the alternative of having post graduate tenants, student nurses or junior doctors as tenants. They tend to be slightly older and may well be for the longer term because the training can take quite a long time. Also, they may be less inclined to keep moving each year, as student tenants.
There are several factors that need to be considered. In particular, landlords cannot expect a full twelve-month let, so you need to calculate your rent on the basis of nine months of the year.
Conversely, this will leave a landlord the summer to do any repairs and re-decoration and you might even be able to do a deal with the University to provide summer school accommodation.
Portfolio landlords – get discounts on landlord insurance on your residential portfolio
Landlords also need to be aware that students, away from home for the first time, are likely to be as untidy and disrespectful of other people’s property as they were at home, so a higher degree of dilapidation than in other letting situations may be possible. This could impact on relationships with neighbours; unless they are also letting to students.
One other issue; is that while the “sign-up” period might be relatively short at the start of each academic year, there can be a “move round” after a few months as some find it difficult to mix with their house- or flat-mates and form new friendships. So it could be worthwhile keeping your listing current with the university and on any websites you use, to “sweep up” any swaps.
Landlords that do decide to let to students should ensure that they get a guarantor for the letting this will protect the landlord from what ever the tenant hordes throw at them.