How do rolling tenancy contracts affect student lets?

Are you looking to introduce rolling tenancy contracts to your student tenants? Are you unsure how this would work or concerned about the potential complications of doing so? We're here to help. While the constraints of the academic year might make the student property market appear rigid, you have far more flexibility than you think. In this article, we'll run you through how rolling contracts would work for your student lettings, the benefits for you as a property manager and how these agreements might affect your tenancies moving forward.

What is a rolling tenancy contract?

Most student tenants looking to occupy a shared house, or a house in multiple occupation (HMO), sign joint assured shorthold tenancies for the academic year. As a result, student rentals are typically let on fixed-term contracts from September to June. However, you also have the option to lease student properties on a periodic or rolling tenancy contract. As the name suggests, this is a tenancy agreement with no set end date, that simply rolls forward unless the landlord or tenant ends the contract. Rent payment is due either weekly or monthly, and either party can serve notice to end the contract at any time, so long as this is defined in the tenancy agreement.

How do rolling tenancy contracts work?

Property managers have two options when setting up a rolling tenancy contract. You can either establish a contract with an initial fixed term which will then roll forward if the tenancy is not broken, or you can set up contracts which roll from the beginning. Of course, if your property is in Scotland, then your tenancy will need to be rolling from the outset, as fixed-terms are illegal.

What are the benefits of rolling tenancy contracts?

Reduce hassle

While fixed-term tenancies offer both landlords and tenants greater security, rolling tenancy contracts provide greater flexibility, which can be a huge benefit. Rolling tenancy contracts save property managers the hassle of finding new tenants at the end of a fixed-term lease. In the short term, this makes it more straightforward to hold on to good tenants.

Rent reliability

Rolling tenancy contracts offer property managers and landlords the reassurance of a regular monthly income. You can also choose to increase your rent at market value during a rolling tenancy contract if your agreement has a rent review clause written into it or you serve your tenants a Section 13 notice. This allows you to respond to changes in the market more quickly and protect your interests. But bear in mind that you cannot use a Section 13 notice to increase the rent on your rolling tenancy more than once every 52 weeks and you need to ensure you are adhering to the terms laid out in your tenancy agreement.

Supplement summer

Rolling tenancies allow property managers to lease student properties outside of the academic year. This is a win for both you and your tenants: students who don't want to pack up their belongings or return home in the summer break can remain in their student accommodation, and the summer months can become more profitable for you as a student property manager. As fixed-term contracts for students typically run from September to June, you're opening up another three months of business for yourself by using a rolling contract.

What do rolling tenancy contracts mean for rent collection?

If you have established an initial fixed-term contract, then you can set up a more flexible rent payment schedule that suits both your requirements and those of your student tenants. However, once the initial fixed period is complete, the tenancy will revert to a monthly rolling contract and the rent will be due on a fixed day each month. If the contract is rolling from the outset, then the tenants will pay monthly from the beginning of the tenancy. As the property manager, you can choose the day that rent is due so that it fits with your schedule and budget.

How do rolling tenancy contracts affect students with maintenance loans?

While there is no specific connection between maintenance grant dates and rent payment due dates, some student property managers choose to set up rent collections that align with payments from the Student Loan Company (SLC). This helps to ensure that students will be able to pay on time. However, as maintenance loan instalments are only paid three times per academic year, aligning your rent schedule with SLC payments is only possible on a fixed-term contract. On a rolling tenancy contract, rent will need to be collected monthly irrespective of when maintenance grants come in. This will require student tenants to plan more thoroughly. As students might be used to the longer-term payment schedules of fixed-term tenancies, it's essential that you convey that rent will now be due monthly so that they can budget accordingly.

How do guarantors and deposit alternative solutions work with rolling tenancies?

Most student tenants will have a guarantor as they are not in full-time employment. This offers landlords and property managers some protection against unpaid or late rent. You can still add guarantors to a rolling tenancy contract. Within this form of agreement, guarantors are only liable for a month's rent, as this is the maximum liability that the tenant has. However, if the contract has an initial minimum fixed term, then the guarantor will also be liable to cover the rent within this term. This ensures that, no matter how you configure your tenancy agreement, you will still be covered as the property manager.

With deposit alternative solutions, tenants forego a traditional deposit, and instead make a one-off, non-refundable payment (usually one week's rent). However, deposit alternatives or replacement schemes are not available for rolling tenancy contracts. Instead, you should implement a traditional deposit scheme for your rolling tenants. The deposit should be protected until the end of the rolling tenancy, even if it began as fixed-term.

Your tenancy, your way

If you're looking to streamline your contract signing process, why not try out the powerful potential of StuRents Operations? With this fully end-to-end property management solution, you can create, send and sign contracts, reference tenants, and maintain your property portfolio from one centralised location.

We've now introduced rolling tenancies as well as fixed-term contracts, so you can have full flexibility when managing your student lets. StuRents empowers you to eliminate inefficiencies and take control of your tenancies, no matter the length of your agreement.