Asked to be student's guarantor - advice please...

N79

alunharford wrote: »

Actually, I hope I'm not being rude but I think that's a little naive.

Consumers want nice predictable contracts. That's why "if you're not completely satisfied bring it back and we'll give you a full refund" is such a popular policy.

Based on the story above, this clause was invoked 7 times in contracts on 1200 properties. Assuming a reasonable 4 people per property that puts the probability of its use at 0.00145. Given that each contract is for about £3000 of services that means the cost per contract of offering the better contract (the one the consumer won't go and have to get legal advice about) is at most £4.375.

The time cost of reassuring each parent that "it's normal" costs more than that - let alone the risk that they find somewhere else and you get left with an empty property (if there is no risk of that, your pricing is wrong). Add to that the fact that you've damaged your commercial relationship with all your customers for about the same money that you spend on toilet paper for your staff.

The real problem is that most student landlords aren't proper businesses. "It's my pension" nonsense prevails so they're also acting like scared naturally-risk-averse consumers instead of businesses.

Your GBP3000 is out as:

1. This only covers rent for the fixed term. You need to add 6 months of rent for a difficult eviction process (12 is probably fairer because student lets have a strong annual cycle).

2. It does not include damage which can run to many 1000s more.

Also in my experience most student LLs are professional (in that they are not BTL types, not that they necessarily act as professionals) as this is one of the harder market segments to be a LL in. It is not for the faint hearted.

robpw2

having read this what concerns me is the total rent for the month to be £1500 - it would be interested to know what the ll's mortgage payment is because i would suggest they are making quite a profit

Ed_Jogg

In the case of my son's landlord, the agent was quite open about the fact that the student letting is his business, his sole source of income, and consequently he acts in a very professional manner about it. He has several properties with them.

As for the rent: (a) it's a 6-bedroomed property, (b) it includes council tax (IIRC) and (c) don't forget that the lease is for ten months, so for two months he has no income coming in.

silvercar

robpw2 wrote: »

having read this what concerns me is the total rent for the month to be £1500 - it would be interested to know what the ll's mortgage payment is because i would suggest they are making quite a profit

Gross rental yield is generally higher in student accommodation, but the hassle factor is higher. Wear and tear is higher, students nowadays require things like broadband, they are generally inexperienced in renting a property so bother the landlord more often. Student accommodation is rovided furnished so that is greater cost and more time consuming. Add to that that tenants move on after 1 or 2 years, so you never have the chance of a long term let, you always need to arrange some kind of refurb in the summer months and not only do you have inexperienced tenants to deal with but also their pesky parents (like me )asking stupid questions.

Student landlords generally have a lot of properties in a single area and are very much hands on - certainly not the newbie BTL landlords.

jillymit

alunharford wrote: »

Actually, I hope I'm not being rude but I think that's a little naive.
Consumers want nice predictable contracts. That's why "if you're not completely satisfied bring it back and we'll give you a full refund" is such a popular policy.
No offence taken. I am saying there is nothing to stop a landlord asking for what ever they like however unfair and in the current market they are likely to get these agreements signed by parents who feel that there is no choice. I'm not blaming them I'm saying if I were a landlord I'd be daft not to do the same.

Based on the story above, this clause was invoked 7 times in contracts on 1200 properties. Assuming a reasonable 4 people per property that puts the probability of its use at 0.00145. Given that each contract is for about £3000 of services that means the cost per contract of offering the better contract (the one the consumer won't go and have to get legal advice about) is at most £4.375.
I love a good sum as much as the next person but can't get my head round this one, sorry. However small the probability or risk of the agreement that's no consolation if you are the one with a huge bill.

The time cost of reassuring each parent that "it's normal" costs more than that - ? a couple of emails?let alone the risk that they find somewhere else and you get left with an empty property not likely in a uni city(if there is no risk of that, your pricing is wrong). Add to that the fact that you've damaged your commercial relationship with all your customers for about the same money that you spend on toilet paper for your staff.As there is a massive amount of new students each year all looking for accommodation and a lack of uni rooms your commercial relationship with your customer is pretty much on a 'if you have a house the same rent and conditions as everyone else your sorted' basis

The real problem is that most student landlords aren't proper businesses. "It's my pension" nonsense prevails so they're also acting like scared naturally-risk-averse consumers instead of businesses.

They can however avoid any risk if they seek to have these guarantees signed by each student they house, I'm just saying that anyone in there right mind would opt for this rather than take a risk.
As a parent I would like to be able to limit my guarantee to my sons share of rent/ damage rather than guarantee the entire household and would like to see a change in what is allowed in these guarantor agreements.

jillymit

silvercar wrote: »

Gross rental yield is generally higher in student accommodation, but the hassle factor is higher. Wear and tear is higher, students nowadays require things like broadband, they are generally inexperienced in renting a property so bother the landlord more often. Student accommodation is rovided furnished so that is greater cost and more time consuming. Add to that that tenants move on after 1 or 2 years, so you never have the chance of a long term let, you always need to arrange some kind of refurb in the summer months and not only do you have inexperienced tenants to deal with but also their pesky parents (like me )asking stupid questions.

Student landlords generally have a lot of properties in a single area and are very much hands on - certainly not the newbie BTL landlords.

Even with the extra hassle of student tenants (and parents like me) it's obviously worth it if the profit margin is high enough.

jillymit

Ed_Jogg wrote: »

In the case of my son's landlord, the agent was quite open about the fact that the student letting is his business, his sole source of income, and consequently he acts in a very professional manner about it. He has several properties with them.

As for the rent: (a) it's a 6-bedroomed property, (b) it includes council tax (IIRC) and (c) don't forget that the lease is for ten months, so for two months he has no income coming in.

My sons landlord has it sussed. The tenancy is for 12 months starting 1st July, again because the demand is high and 'they can'.
According to the uni advice centre finding property nearer to September would be extremely difficult.

jillymit

robpw2 wrote: »

having read this what concerns me is the total rent for the month to be £1500 - it would be interested to know what the ll's mortgage payment is because i would suggest they are making quite a profit

Probably. Still wish I could afford to buy a big property near a uni.:D

456789

Ed_Jogg wrote: »

(b) it includes council tax (IIRC)

Students shouldn't be paying council tax (unless a non student also lives in the property)

Ed_Jogg

OK. I did put 'IIRC', and obviously I didn't (recall correctly, that is!). I'll have to have another look at the TA...