It is vital as a landlord that you carefully consider the area of the rental market that you wish to target with your investment property, as it will be one of your most important business decisions. Various subsectors exist within the general market, each catering for different types of tenants. Some of these subsectors, such as that for student accommodation, are highly specialised in terms of the skills and experience typically required in order to thrive in them, and it is vital that a landlord knows which group they wish to rent to so that the buy-to-let property they buy is suitable. Here, we give you a rundown of the various tenant types. Make sure to look for good landlord insurance.
Many tenants are young professionals in their 20s or 30s, who are employed and expect top quality accommodation. Of priority to these individuals is an area from which it is easy to get to work as well as to restaurants and bars, while older tenants may desire parking. One or two bedroom properties tend to be the norm for this tenant type, as most do not have children.
Another type of tenant that you could target is the ’still single’. Often still in their 30s, these are the people who opt to live alone. They are greatly increasing in number. As they are a bit more mature than their younger counterparts, they are more likely to value such little home luxuries as car parking and a dishwasher, while gardening may also be a pursuit for some.
A slightly different type of tenant is the individual who may have broken off a relationship or marriage to become single again. Their financial circumstances vary vastly, and they may not stay for long if their occupation represents a ’stop gap’ arrangement while they look to move on to a new relationship.
Job re-locators tend to be well paid professionals. If they have families, important issues could include the quality of local schools. If as is often the case, they are singles only set to stay temporarily, then unfurnished accommodation tends to be preferred, although the opposite is likely to be the case for couples or families on more permanent stays. Their employer will often pay their rent. They can also be among the most demanding tenants while also promising high rental returns.
The family market is a larger one than you might imagine it to be, as almost a quarter of families still rent or live with parents. Schools and gardens are likely to be particularly important to them. One of the advantages of letting to families is that there is often a lower tenant turnover than for singles, with many staying put for several years.
There are also the individuals to consider who are on housing benefits. There have recently been changes in the arrangements for landlords getting paid, in which the tenant receives the rent rather than it going directly to the landlord. This has caused fears among some landlords that more time will be spent chasing up tenants for rent, which is worth contemplating if you are considering investing in this subsector.
Higher Education’s considerable expansion in recent years, meanwhile, coupled to the incentive for many to retrain offered by the recession, has allowed for the corresponding increase in student accommodation. In some parts of the UK such as Leeds, this has led to more properties being available to rent than students who require them. That said, recent research has confirmed that demand for rooms from students in London continues to far exceed supply. Far from resembling the stereotype, much student accommodation today is actually aimed at a higher end of the market, although postgraduates tend to be fussier than undergraduates.
Other types of tenancies include corporate or company lets, where the residential property is rented out to the company rather than to an individual, as well as regulated tenancies and holiday lets. These are all excluded from the provisions of an assured short hold tenancy agreement that governs a standard letting, as is a property with a rental of above £25,000 a year.