Landlord insurance and your student tenants

July 17, 2023

There are nearly 3 million students at universities and colleges in the UK. Last year saw a 4% increase on the previous year and 2023 is likely to see still further gains. More than 6,000 different courses of study, throughout every imaginable discipline, are offered to both undergraduates and graduates at more than 130 universities in the UK.

For the majority, entering further education also comes with the chance of breaking away from home and living an independent life – and for that, of course, any student will also need to find a place to live.

Britain maintains a strong reputation for further education, attracting students from all over the world and these people will also, of course, need somewhere to live. Foreign students alone account for 559,825 individuals at college or university in 2023. According to recent figures, the number of international students in the UK surged by nearly 24% on the previous year’s figures.

If you are a landlord – especially one with a House in Multiple Occupation (HMO) – and with a new academic year about to start in just a month or two, will you be able to take advantage of this influx of potentially highly valuable tenants?

HMOs – classic student accommodation

Britain’s Houses in Multiple Occupation (HMOs) are ideal student accommodation. They offer shared living at an affordable rent – satisfying many a student’s social and economic needs.

For landlords, the HMO also typically offers a sound investment:

• rental yields are typically higher than for single-tenant premises – especially in the many university and college towns and cities up and down the UK;

• landlords can rely on a more diversified income stream when rent is due from several tenants rather than a single person;

• even if one tenant moves out, you still have rental income from those remaining – there are fewer voids and vacancies;

• with a higher return from your rental income, you might be less reliant on expensive borrowing via your buy to let mortgage; and

• the property itself is still likely to enjoy capital appreciation over time.

HMO insurance

In pursuit of these benefits, you will give careful thought to the need for suitable insurance to protect your investment in the property and your buy to let business.

Specialist HMO insurance is specifically designed to provide optimum protection against the perils encountered by landlords of Houses in Multiple Occupation.

Compliance

A House in Multiple Occupation (HMO) is formally defined as a dwelling let to at least three people who are not all from the same household and who share certain basic facilities such as the kitchen and bathroom and toilet. As the government website notes, that is why an HMO is also known as a “house share”.

If the property is let to more than five people comprising more than a single household – who also share facilities – the premises are defined as a “large HMO”. Landlords of all large HMOs require a licence issued by the local authority and valid for a maximum of 5 years. Your local council might also require a licence for you to run a smaller HMO – subject to the licensing conditions it sees fit.

Whatever the specific conditions written into any local HMO licence, as the landlord you are obliged to comply with several responsibilities over and above those required of landlords of single-tenanted property. As a landlord of an HMO, these include and are not limited to:

• ensuring that the premises offer suitable space and facilities for the number of people living there;

• you being a “fit and proper person” to be such a landlord (typically, that you do not have a criminal record or a history of past breaches of housing rules and regulations);

• sending your local council a valid annual gas safety certificate – duly authorised by a registered Gas Safe engineer;

• installing properly maintained smoke alarms, carbon monoxide detectors and fire doors; and

• providing electrical safety certificates it might require.

As a recent article warned, many people are under the mistaken impression that the fines for letting an HMO without the necessary local authority licence are limited to £20,000 or so – in fact, any landlord who does so, runs the risk of an unlimited fine, a criminal conviction, and even imprisonment.