Be aware of pitfalls of leasing accommodation to students

Investing in the student accommodation sector is a good move if measures are put in place to mitigate the risks.

Investing in the student accommodation sector is a good move if measures are put in place to mitigate the risks.

Published Jan 24, 2019


DURBAN - Investing in the student accommodation sector is a smart move, however the property owner needs to ensure there are the necessary safeguards in place.

According to regional director and chief executive of RE/MAX of Southern Africa, Adrian Goslett, investors should carefully consider the risks involved.

“While student accommodation does offer investors a low-risk option in terms of the possibility of prolonged vacancies, this type of rental income does pose other risks, such as short-notice lease terminations and the possibility for neglect and damage to the property.”

Grant Gavin, broker and owner of RE/MAX Panache said: “Student rentals are also often rented out per room, which can result in a higher rental return for the landlord. Since students require ease of access to campus as a priority, they are often less demanding with regards to other physical aspects of the property. Students are therefore happy to share common areas such as lounges, kitchens and entertainment areas provided the rent is affordable and the property is within easy access to campus.”

However, Gavin said students are also less likely to maintain the property.

“You might need to employ a cleaner to ensure that the property is maintained to a reasonable level of cleanliness.

“Some student accommodation landlords even go so far as to employ a house manager who visits the property regularly and is on hand to assist the students if they have any problems.”

He also suggests that landlords add a small levy to the monthly rental amount to cover incidental costs if cleaners or property managers are hired.

“Damage deposits should also be secured as per any normal rental. Considering that typically it’s a parent who will sign the lease and pay for the rental or act as guarantor for the rental and any other costs, it is advisable to have house rules agreed to by the students which are signed before the lease is accepted.”

Gavin said property owners should bear in mind the needs of students and their parents when advertising a property as student accommodation.

“If you’re going to rent a property out for students and you want to maximise your return, ensure that the property is appealing to their age demographic. Wi-fi with good streaming capacity is a must. A dishwasher, washing machine and tumble dryer are also valuable draw cards and a good entertainment area would be an attraction too. Finally, remember to think like a parent. What features would you want to see if you were leaving your child in your property? Security is a must, with either alarm systems or security gates.”


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