Leydon Lettings Student Houses in Canterbury

Questionaire dated Feb 13 2012

Response to questions from the NLA Managing Editor Louise Gale

 1.       Roughly how many properties do you let to students?

My wife Rita and I own and let over 50 properties comprising over 250 tenants (excluding managed houses let for other landlords under our new Letting agency for which insufficient yield data is available).

 2.       In which part of the country are these properties?Leydon Lettings specialises in letting student houses in Canterbury Kent where we are based .

 3.       What kind of yields do you obtain for these properties?

1. Rental yields in our portfolio currently range from 8 % to 14 % with a portfolio average of 11.85% gross.  This is based on rent pa / property values * 100.  Property values are recalculated following significant renovation usually improving the yield.   We bought 13 properties in 2011 producing some lower yields of around 8%. 
2. An interesting observation with yields is that the most popular locations often initially generate the lowest yields.  This is due to the high purchase price and renovation costs.  Students have an affordable rent ceiling - especially in the current economy, resulting for the first time in some popular locations taking longer to let. 
3. Conversely the highest yielding properties may require more effort in terms of viewings and support.  So yields are only part of the picture.  
4. Most Leydon Lettings properties have 6 beds which invariably produce the best yields.   4 bed houses at the lower end are touching 8%
5. Some lenders e.g. TMV, on certain loan products, limit the number of tenants.  So whilst the property has the potential for say six tenants, we are permitted to let to a maximum of four students.   At a future date, for a nominal cost we can add two rooms, after swapping mortgage products at the end of the lock in period.  In such a scenario,  this would ultimately increase the yield by a third of the resulting yield.  So current yields are only a guide (potential yield is key for me).  
6. Another factor about to influence student and all HMO yields in Canterbury is the impending implementation of Art. 4.  This will probably increase the purchase price of HMO-status-homes, but probably not the rent, thereby reducing potential yields on new purchases.  Conversely, owner occupied home values could fall in relation to HMOs, which logically should increase the yield, however, without permission to let as an HMO a permissible family-let will generate less rent and thus lower yields!

4.       How do you deal with empty properties during the Summer holidays??

1. Most maintenance and renovation occurs during Summer when properties are unoccupied.  Every house is also professionally cleaned during summer.  Most of our properties are clustered in groups within close proximity of each other.  This means nearby houses are within sight, en-route or a walk away. improving management synergy. 
2. Following exam failures a few students drop out.  To fill these vacancies we conduct viewings throughout the summer with the result that we necessarily attend properties.  During these visits we collect tell-tale post otherwise advertising vacant houses to burglars.   Prospective tenants have until September to choose a house, thus there is lack of urgency with students not committing to let until the end of July.  Meanwhile we are obliged to mitigate a tenants loss by continuing conducting viewings for a month with few takers. 
3. Not all students leave during the summer.  Many students delay departure pending graduation ceremonies, to keep their jobs open or have families too far away to travel. 
4. Other students arrive on the first day of the tenancy on 1 July particularly if they do not enjoy summer discounts.  This last group can present challenges if maintenance and renovation is scheduled.  For this reason we include a clause in the tenancy permitting the landlord to do specific works, bringing this to tenants attention.  Usually tenants are happy to receive improvements and occasional free upgrades - most  upgrades post-contract-signing, are provided free for the duration of the contract.  This is a quirk of student letting: some desirable but non-essential work may not be predictably certain of completion, during the short summer vacation.  Leydon Lettings takes the pragmatic view that it is better to give free upgrade, than to fail to deliver a chargeable upgrade and risk losing our reputation.  Ex-gratia upgrades are not compulsory.

5.       How do you deal with empty properties during the Summer holidays?

1. Most houses Near uni are more expensive to buy and so attract a premium rent.  Leydon Lettings adopts a two tier system with discounts only available for houses located further than say ¾ of a mile from uni.  Returning to the previous topic of yields – even with full-summer-rents, the close proximity houses, often produce lower yields.
2. In summer some houses are let to holiday makers or foreign language students.  We provide in our contract that discounted houses may be let during summer (continuing-tenant-houses are not so let in summer).  We do not actively seek summer lets because they can present more work than they are worth, but we seem to get them anyway.   All this activity means summer is our busiest time! 
3. Few student landlords take a holiday in summer; holidays have to wait until Easter - the quiet season.

6.       Do you advertise with the university or elsewhere??

1. Both.  Our own website is the main source of enquiries.

7.       How important is it to have a relationship with university accommodation offices?

1. It is not vital to have a good relationship but it helps; however, it is vital not to have a bad relationship.  Good news is boring; bad news is unforgettable!  Never knowingly described as such, sometimes it pays to be boring!  This said last March the head of accommodation invited me to speak at Kent university landlord’s meeting with NLA and others on the panel so I suppose I must be pretty boring?

8.       Do you need to have accreditation to rent via the university??

1. Yes.  Most landlords are not accredited seeing this as duplicating The Housing Act 2004.  I have some sympathy with this view but PC compels me to accredit anyway. 

9.       Have you had to comply with any special rules to let to students??

1. I love the question.  Aimed at encouraging better letting standards and safety The Housing Act 2004 encompasses the legal framework for all landlords.  Following Licensing in 2006 it transpired that most Canterbury landlords already compiled with the rules.  None of Leydon Lettings licensable properties required any further recommendations to comply.  The inspector announced that 95% of inspections for other local licensable landlord properties also complied. 
2. Neighbourhood campaigns have rightly compelled landlords to consider the impact of students in the community.  There are multiple overlapping layers of legislation from Parliament via Statute down to local Delegated Legislation.  Each layer of legislation attracts fees:   Licensing fees, Accreditation fees, University Student Housing  Schemes run by each university all attract fees, but none appear to significantly improve housing standards compared to the Housing Acts (as amended in 2004).
3. Licensed houses are governed by higher standards of safety requiring: emergency lighting, fire doors throughout, smoke alarms in all rooms – most of these Leydon already install even in non-licensed houses.  Leydon Lettings in addition to  compulsory HMO landlord gas safety certificates also insist on non-compulsory annual gas services.  Young students are more vulnerable and less aware of dangers so they need extra protection. 

10.       Any tips on furnishing your student lets??

1. Yes!  Spend a night at the Grosvenor House Hotel.  I modelled our houses on a small scale of what I found on my wedding night!  The notion that, ”it is only for students”, is not only offensive, but economically impropitious.  Students are guilt-edged clients, without whom we have no business.  Buy new!  Do not economise with cheap beds and children’s quality mattresses or multi-period bedroom suites from some 1960s ‘bedsit-land’ emporium.  We never ever buy second-hand bedroom furniture, carpets or curtains – always new!  This said be sensible, furniture subject to excessive wear, like lounge-sofas, we often buy quality second hand – it is disingenuous to charge for predictably high wear to such furniture at check-out.  However, one group insisted they wanted a new lounge suite and when we agreed they wrecked it within months - we charged them – the only group I can remember charging in 25 years for a suite. We have never charged for damage to a second hand lounge-suite.  They are inexpensive – just buy another!

11.       What kind of problems do you encounter when letting to students and what can you do to avoid these??

1. 25 years experience (2012 is Leydon’s silver jubilee) has highlighted some problems:
2. For most students, university living may be the first time they’ve had to manage finances.  Many students are not as organised as others – regularly paying rent late.  Advance warnings of rent due dates are essential.
3. Student loan delays may be the fault of the loan release co. – it may simply be the student has not applied for the loan.   Students may have spent the rent on other non essentials.
4. Inexperienced renters – means they are unfamiliar with basic problem solving.  Breaking shower risers is common;  changing light bulbs is beyond some; unaware of fault finding procedures even how to turn on /off switches, many cannot operate white-goods appliances: washing machines etc. so this involves more hand holding and additional maintenance!
5. Parental non-contractual expectations can mean potential conflict with contractual tenant obligations. Well-meaning parents may not have read the contract.  We deal with two to three people instead of just one and occasionally step-parents to boot!  All must be treated courteously as party to the contract.  Parents are dealing with the temporal loss of their children and may wish to demonstrate their love by making unreasonable demands - usually to their children’s chagrin.  Understanding such motives enables us to be impartial and remain calm, gently steering to the point-of-reference - the tenancy agreement.  Parents may have endured a long emotional journey to despatch their children.  They may already be coping with frustrations, resentful younger siblings not receiving the same attention - perhaps having forgotten to pack items of importance.  Once settled in there are teething troubles and then when courses commence complaints cease.
6. The house may be cleaned at the end of June but by early September a number of upturned dead spiders could cause shrieks of female horror and “unclean”.  Leydon try and arrive early to remove these.  Ironically if any tenants arrive in July the house is likely to be unrecognisable by September.  A downward spiral of progressively stale pizza boxes is common after partial occupation.   This will cause subsequent late arrivals with parents to react.  We try and encourage tenants to  be minded of this and to clear up in time.  See anecdotes at: http://www.leydonlettings.co.uk/reasons-2b-cheerful.html
7. Students generally live unconventionally. Night-time lifestyles mean early morning viewings are out – afternoons only.  This can also result in increasing neighbouring resentment.  I provide neighbours with my contact details to report any situations.  Owner occupier neighbours can enable us to quickly curtail problems.
8. Students may not  have learned how to manage a household.  Cleaning is a skill yet to be learned.
9. Bin days requires communication of recycling and discipline to put out bins on set days.
10. Students (and parents) often have a disproportionally strong sense of entitlement that only experience quells.  This is why Leydon Lettings contract is sufficiently detailed, pre-empting complaints.
11. The following applies to students and most  other tenancies and may not be specific to the question:
12. Be clear - Lack of clarity is a trap for the unwary landlord but normally overcome by properly drafted tenancy agreements.  Each time we encounter an uncovered manhole in our contract, we place a ‘manhole-cover clause’ over it.  Leydon’s  contract  is more like a history pamphlet – the contract is our point of reference should things go wrong.  We are careful not to compromise our contract by external factors: contradictory website data, representatives contradicting policy, etc.
13. Be honest If Leydon Lettings is at fault, it is our policy to just be honest and admit it and pay commensurate compensation.  This approach will turn a criticism into a compliment.  No one finds “sorry” easy, but it is likely to win more appreciation than digging your heels in.  Equally if the tenant is wrong do not rub their nose in it!   Some agents, particularly student to-let boards jeer “Missed It!”  This seems insensitive to me.  One can still say sorry even when ‘right’,  “I am sorry for”: “any misunderstanding”, “the difficulties you have endured”.  Whilst this non-apologetic apology does not actually appologise it helps to assuage anger and shows a measure of empathy which ushers the tenant into acceptance of a contraviewpoint, rather than merely focusing on how harshly you responded to their genuine albeit misplaced culpability.
14. Be realistic - Do not promise what you might not realistically deliver.  Avoid words like certainly, definitely unless you have a guarantee.
15. Be Pre-emptive - If Leydon is renovating a student house in summer it only takes a sick worker to hold up the chain of trades delaying completion.  Plan ahead - have a contingency and expect the worst.  Last summer a plumber failed to deliver following the installations of new bathrooms.  A second plumber also failed.  Our least likely contingency plan-C rescued our reputation and the student tenants  arriving in September.  
16. Be in touch - this covers all aspects of letting but particularly if cognisant of potential problems.  If there is a chance you cannot deliver in time...  say so!  You will win respect amidst any disappointment.  If your fears are unfounded you will be revered more.
17. Be minded -  do not forget, nor rely on, trades that are likely to let you down.  Do not discard them, nor fall out with them - just keep them at a distance for ‘no-alternative scenarios’, in an emergency even an unreliable tradesperson can rescue a  situation.

Bob Leydon of Leydon Lettings - for more info see www.leydonlettings.co.uk