How to survive the craziness

The UK is a world leader in higher education. Britain is the third most popular country in the world for international students (August 2021) and the number of international students applying to UK universities has doubled in the last 20 years.

Many landlords look to invest in student properties, for the above and for the following reasons:

1. Demand is high and the student rental market doesn’t fluctuate to the same extent as the rest of the private rental sector.

2. Rental cycles are predictable and most student lets follow a pattern, as students will live in a property for the duration of their academic year. Sometimes longer.

3. The model is financially robust. Often the yields are higher for student lets, students will pay their own bills and, full time students are exempt from Council Tax. In addition to this, your void rate will be low, because students will sign a contract for the whole year. Despite all of the above, student lets have garnered a bad reputation in some circles and we often find landlords shaking their heads vigorously and taking a sharp intake of breath, when we discuss their options and mention the property model as a possibility. With all the obvious benefits, why is this the case? Student lets tend to fall under the definition of HMOs (3 or more tenants, from 2 or more households) which is a compliance and regulation heavy property model. HMOs (Houses of Multiple Occupation) are not for the faint hearted or inexperienced.

Some students, especially first and second years, may not have lived independently before and find certain things like changing lightbulbs, budgeting for food, conserving energy, locating a fuse-box, taking out bins, getting on with their housemates etc., challenging, as they have never dealt with them before. This often causes disharmony within the house and lots of phone calls to the landlord or the agent. 32 Students can cause more damage, leaving the landlord with a large refurb bill at the end of a tenancy. In our experience, this is the top concern of landlords when discussing student lets.

Drugs, parties, late payment of rent, angry neighbours – all self-explanatory but are things we hear often, when discussing previous experiences with landlords.

By far and away the biggest objection from landlords seems to be damage, with one landlord telling us “…it was fine, I just expected to have to decorate the whole house at the end of every tenancy and wipe obscene drawings off the white goods…” Some agents even recommend a slightly shorter tenancy, to allow time for a repaint between turnarounds, because this is their expectation of the tenancy.

So, with all this in mind, how can you plan for a successful student tenancy, which won’t break the bank and leave you prematurely grey?

Firstly, we’d say, choose better tenants! Just because they’re students, doesn’t mean they have to be a nightmare. Know what types of students tend to make better tenants (those looking early, as they will be better organised and more diligent and more mature students like post grads for example), interview them well and use the same criteria you’d use for selection of other tenant types, make sure that you see the whole group not just the lead tenant and ensure that you watch the group dynamic – how do they behave and interact with each other?

Ensure you have Guarantors, reference the Guarantors and make sure that your Guarantor Agreements are legal and watertight.

Take deposits and protect them in a Government backed scheme.

Prepare a clear inventory, complete with pictures and ensure that every tenant in the group will be there at the check-in to go through the inventory. Advise them that you will also expect this at the check-out. Go through the contract with them, to make sure that they understand the document and what is expected of them and where they should go if they have a problem. Give them a house booklet – an abridged version of the contract, detailing things like emergency numbers, bin rotas, Wi-Fi codes, location of the stop cock, bus routes and common “what to do ifs…” Communicate with them well and clearly throughout the tenancy.

Understand that they may not be as experienced at living independently and have videos to hand on common household tasks like changing a lightbulb, repressurizing a boiler, locating a fuse box. Have a handout on mould as part of the contract and draw their attention to it, explain what causes it and why this is important.

Prepare to be patient - if you act negatively every time they report something, guess what will happen… and, trust us, you do want to know!

Inspect your property regularly.

With some preparation, good and clear communication, common sense, and goodwill student lets can run very smoothly. Our advice would be to take the time and effort setting things up correctly and be diligent with your management processes and you will reap the benefits of this lucrative and popular model.

BUYING YOUR FIRST HOME IN 2022: HERE IS SIX TIPS TO HELP YOU ON YOUR WAY

For first time buyers the prospect of getting on the property ladder feels overwhelming and out of reach. Here we simplify the essential first steps and set out what you need to do and what help you can access to enable you to buy your first home.

1. Start building a deposit

In order to buy your first home you need to save a deposit. Your mortgage deposit will normally need to be for at least 5% of the value of the property you want to buy. So if you want to buy a home costing £250,000, you’ll need to save up a deposit of at least £12,500. Ideally though you would save more than 5%; the bigger the deposit the wider range of mortgages you’ll be able to access and at cheaper rates. This is because with a bigger deposit you’re perceived as lower risk by mortgage lenders.

As house prices have soared so has the amount you need to save – the average first-time buyer needs a £33,000 deposit, according to Halifax. The good news is the government can help you save if you choose the right account.

Help to Buy ISAs and Lifetime ISAs can both give your house savings a big boost. You can save up to £200 a month into a Help to Buy ISA and the money will grow tax-free. 34 Plus, when you are ready to buy a home the government will add another 25% to your balance. With a Lifetime ISA you can save up to £4,000 a year with the government adding a 25% bonus annually.

2. Check your credit score

While you are saving to buy your first home you can start sprucing up your credit rating ready for when you make a mortgage application. Lenders want to see you are a reliable borrower when they are assessing your mortgage application, so it helps to have a good credit score.

3. Clean up your current account

How much you can borrow will be determined by your lender who will do an affordability test based on your income and monthly outgoings. It can be a really good idea therefore to go through your current account six months before you make a mortgage application and see for yourself where all your money is going. If you have an expensive gym membership, regular big nights out or expensive credit agreements try to cancel them and curtail your spending so that your finances look in better shape when the lender starts looking.

When it is time to buy your first home you’ll find it involves a lot of additional costs that you need to factor in when working out what you can afford. This includes legal fees, taxes, surveys and removal costs.

Once you own your first home you’ll discover there are also a lot of costs involved in running it that you may never have had to deal with before. This includes ground rent, service charges, ongoing maintenance costs and lots more.

5. Speak to a mortgage broker

It’s amazing how many people think they are a mortgage expert and arrange the biggest loan of their lives without getting any advice or shopping around. But, with a six-figure loan a tiny difference in the interest rate can mean you end up paying tens of thousands of pounds more over the lifetime of your mortgage. For example, a £200,000 mortgage at 3.5% will cost you almost £2,000 more over three years than the same mortgage at 3%. Similarly, the fees on your mortgage can make a big difference to the overall cost of buying your first home. It’s not just the mortgage rate you need to consider but also the type of mortgage, whether fixed or variable and the term of the mortgage (usually 25 years but it could be 35 years so that repayments can be stretched over a longer period, making them more affordable month on month).

Mortgage brokers will also be up on new mortgage products like Deposit Unlock or Green mortgages and can discuss the pros and cons of these.

Use a mortgage broker and their expertise will mean you get the best possible mortgage for your circumstances at the lowest possible rate. They can also help you navigate the mortgage market for the first time, explore options and may introduce you to lenders who you’ve never even heard of but have the best product for you and your circumstances.

6. Talk to your family

You don’t have to go it alone when you want to buy your first home. Your family may be able to help you in a number of ways. The Bank of Mum and Dad is now considered the seventh biggest lender in the UK mortgage market because so many parents are helping their children stump up a deposit on their first home.

Has your property gone up in price?

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