Renting a Room to a Student: What are the advantages for Landlords?
Landlords | Tips for Landlords | 07/11/17
The advantages of renting to students might be far more numerous than you think! With the never ending accommodation search for students, especially around the start of new term, now could not be a better time to post an ad!
Here are some rules you should know to help make your rental easy.
The lease, a solid contract
Taking in a lodger has fewer legal requirements than letting a whole property, however it is always recommended to have some form of contract or writing to protect you both if any disagreement were to arise- a Lodger Agreement is the most commonly used, but this can only be used in situations where the property is the landlord's principal home.
There is a furnished rental contract suitable for renting to students and can be reduced to nine months, which is often the length a student would want to rent for as it is around the length of an academic year. The advantage of this contract is that both parties know the term of the lease. The landlord can get their home back after nine months, and the tenant can leave the apartment without having to send a letter stating their leave. Be careful though, the tenant can leave at any time before that because the notice period of a furnished apartment is only 1 month; a period that can be very short for a landlord to find a replacement.
The case of a flatshare
In the case of a flatshare, the law provides a solidarity clause. This clause makes each tenant liable for the payment of rent. For example, if bills are unpaid, the landlord may claim the payment of the full rent and charges from any of the tenants.
However, if a joint contract is made, each tenant is responsible for the proportional part of their rent, so if there are two roommates, each one is responsible for paying 50% of the rent and one is not obligated to pay in case of breach of the other party.
The most common contracts in the UK for a live-out landlord are the Assured Shorthold Tenancies- it's the default agreement if you don't specify another type when letting your property. An Assured Shorthold Tenancy Agreement allows the landlord or tenant to end the tenancy after an initial six month period, by giving notice to quit.
The tax benefits
The Rent a Room Scheme lets you earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation in your home, (this is halved if you share the income with your partner or someone else). This new threshold was introduced in April 2016, and before that it was £4,250, so this is a huge increase!
The tax exemption is automatic if you earn less than the threshold, so you don’t need to do anything, but if you earn above it, you must complete a tax return. After this, you can simply opt into the scheme and claim your tax-free allowance.
In regard to renting to students, the owner must take into account that student often won't have much with them and aren't looking for permanent rentals, so it is advisable to rent a room or apartment that is furnished. A home will also be rented more easily if it is in a big city, close to universities and public transport.
A great advantage for landlords is that students will know where they'll be studying far in advance and often like to get this sorted early, so it means a landlord can often have their tenants sorted far in advance to save them having empty periods.
As a landlord, it may be useful to also read this article which helps understand the Housing Act of 1988 in a more simplified way.
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