How to make your investment property appeal to Gen Z renters

Last Updated: 13-02-2024

Reading Time: 9 minutes

If you've bought your rental property to attract students, it's tempting to offer only the basics. It's even more tempting with student numbers continuing to increase, whilst properties they can afford become evermore scarce.

It's almost a private landlord's dream: way more demand than the market can support. And, in many instances, potential tenants who'll be there for at least three years.

gen z group on staircase

So, why aren't university types banging down your door to rent your investment property?

Basic requirements for students and young professionals in rented accommodation have changed.

And this has little to do with suggestions that Gen Z is pampered. (Okay: maybe a little.)

But the world they're accustomed to is very different to the one previous generations inhabited in their youth.

Today, we're going to look at the basic amenities Gen Z needs from their accommodation. Then we'll see where you can go the extra mile to garner a queue of bicycles around your HMO or apartment.

The opportunity for private landlords

Earlier this week, I read that:

"The average 26-year-old with help [from The Family Bank] paid about £254,000 for their first home. Those with no help waited a decade—until they were 37—to buy a property for an equivalent sum."

Eye-opening, indeed.

Then, in a separate article, it turns out that students moving to university cities face similar struggles:

"…there are a quarter fewer homes available to rent than there were before the pandemic, even though the number of full-time students has increased by nearly 12.5% over the same period."

That second article then also affirmed how difficult it was for young professionals to get onto the property ladder:

"The current cost of living crisis means young professionals are finding it increasingly difficult to afford to rent a place on their own or are struggling to raise the deposit needed to buy a home, meaning many are being pushed into considering house sharing."

Along with the average house price in the UK standing at £284,950, you don't have to be a genius to work out the opportunity. 

If you have a property—especially a HMO—geared towards Gen Z, you can set yourself apart from the competition. Here's how you can make that happen.

Amenities for Gen Z: overview

Specific amenities a private landlord should provide for their tenants depend on several factors. First, there are the legal requirements. Next, there's comfort and convenience. Finally, there are the student/young professional bolt-ons to catapult you to the front of the field.

Legal requirements

The essential amenities landlords must provide from a legal perspective change from region to region. As a broad guideline, these typically cover:

  • Heating and hot water: a legal requirement in most places;
  • Safe and secure property: ensure that your property meets building codes and fire safety regulations;
  • Working appliances: oven, refrigerator, sink, etc., but the type of property you're leasing will dictate exactly what appliances you must provide;
  • Pest control: again, local regulations and property type will dictate what you have to provide.

Familiarise yourself with the legal requirements in your area before you buy your property. You don't want to have to shell out for expensive upgrades after you've worked out your yield. 

But, looking at that list above, good landlords should provide all of those, whether there's a legal requirement to, or not.

Gen Z-focused essentials

You may well think of the next list as luxuries, or at least 'nice-to-haves'. They're not. Gen Z will weight the following criteria just as heavily as the basics:

  • High-speed internet: a non-negotiable no-brainer for academic work, staying connected and streaming;
    • also, consider offering individual connections or a robust, secure shared network;
  • Furnished apartments: many students won't have furniture; offer basic furnishings such as a bed, desk, and chairs;
  • Laundry facilities: pre-installed or readily accessible laundry facilities are essential for student convenience and young professionals who need to look sharp at all times.
  • Safe, secure property: secure entry points (and bicycle parking), well-lit common areas, and fire safety measures are crucial.
  • Basic appliances: as well as the legally-required appliances, don't forget to throw in a microwave and a dishwasher!

Post-pandemic considerations

In most instances, Gen Z expect more from their rented accommodation. If your property only offers shared bathroom facilities, it could be a downside potential renters can't overlook. A private loo is the very least they expect. Make their room an en suite, and you're starting to talk their language.

Conversely, although they want privacy, many will also expect a comfortable shared living space. And, dare I say, a huge screen with the capacity to plug in an X-Box.

To add to the comfort factor, air conditioning wouldn't go amiss, either. And go green! 

Energy efficiency is important to Gen Z, including a well-insulated apartment that helps them cut down on their energy bills. If politicians get their acts together, green issues may yet become compulsory. You could do yourself a favour by getting ahead of the eco-friendly curve today.

And think 'Smart'. AI is as ubiquitous with Gen Z as smartphones and iPads became with Gen Y. They expect Smart features. They also expect their lodgings to keep pace with AI for the duration of their tenancy.

How can I work out what this will cost? 

No doubt you have a budget in mind to enable your investment to make you a healthy return. So, it's critical you strike the balance between offering attractive amenities and keeping costs manageable.

Local legal requirements and your own plans for the future will, in part, dictate your spend. But, be real. Ask yourself how far you want to go to entice students and young professionals to rent your property.

Consider both your initial investment and the ongoing maintenance expenses associated with the amenities you plan to provide. How much of that are you prepared to stand, and how much will you pass on to your tenants?

To help you decide, research comparable properties in your area. See what amenities they offer and the rent they charge for the privilege. A trip to local estate agents before you buy can help decide which amenities are prudent and which may be overkill.

Working out how much you can borrow, your stress test, yield and deposit

Once you have those figures around you, you can begin work on getting your mortgage. Or, if you have a property and want to upgrade, you may wonder what it will cost to remortgage. 

Our parent brand's website, Mortgage Quest, has three separate buy-to-let calculators to help you work out what's affordable.

Stamp Duty

Don't forget to budget for Stamp Duty. You'll have to pay it when you buy the investment property and Stamp Duty for second/investment properties is much more than residential SDLT.

Buy-to-let mortgage calculator

How you can borrow is directly linked to your rental margin (buffer) and how well the rent will stand up to fluctuations in interest rates (stress test).

Stress tests and minimum buffer thresholds vary widely from lender to lender. Our buy-to-let mortgage calculator will give you a guide to what you might be able to borrow.

Buy-to-let rental income calculator

If you already know what you can borrow but want to know what rent to charge, we can help you there, too.

The buy-to-let rental income calculator works when you already know the mortgage amount, stress test rate and rental margin your lender expects you to achieve.

There's a lot there to consider, there. If you need help with your buy-to-let mortgage, or with the calculations to ensure you'll make a profit with your investment property, call our brokers. They have all the gen on Gen Z to help ensure you're both down with the kids and up on your profit margin. Good luck.

Author: John Yerou

John Yerou is a pioneer of contractor mortgages and owner and founder of Freelancer Financials, Contractor Mortgages®, C&F Mortgages and Self Employed Mortgages, trading styles and brands of the award-winning Mortgage Quest Ltd.

Posted by John Yerou

on February 13th, 2024 17:23pm in Mortgage Blog.