What type of contract-holder should I aim to attract, and how?

There’s a whole range of contract-holder types – including families, young working professionals, students and corporate clients – and each presents a very different kind of investment.

The type of contract-holder you can attract is directly linked to the type and location of dwelling you invest in, and both these things depend on your investment goals, strategy and personal circumstances.

For example, if affordability isn’t an issue, and your main priority is long-term capital growth from a dwelling that will cover its costs ongoing, if your dwelling is in an area with great schools, letting to a family might be ideal.

You will need to buy a decent size home in a desirable area and demand is likely to be strong, both from contract-holders for ongoing rental and from homeowners when you come to sell, meaning the dwelling should increase well in value over time. And when demand is high and you can offer a good standard of accommodation, you’re unlikely to suffer from void periods. Families are also more likely to stay in the same home for several years, which is ideal if you would prefer longer tenancies.

On the other hand, if you have a smaller budget, live in a city centre and are looking to supplement your income, letting a furnished modern flat or ‘starter home’ to a professional working couple may be a good option.

And if rental income is your priority – particularly if you’re looking to replace a current salary and become a part or full-time landlord – then it might suit you to invest in Houses of Multiple Occupation (HMO). You could rent individual furnished rooms on an all-inclusive basis to working adults or let a whole dwelling to a group of students.

Although HMO properties are often in areas where house prices are on the lower side and therefore capital appreciation might be slower, the rental income can be two to three times that of a ‘single let’. They do require more management because of individual contract-holders moving in and out at different times, and running costs are higher, but the rental profits make these kinds of multi-lets very popular among professional landlords.

Ultimately, the success of a rental investment will depend on having a strong ongoing demand from your target contract-holders, and each type of contract-holder will have different requirements in terms of exactly what they’re looking for in a home. For instance:

• Working adults tend to look to be close to public transport, restaurants and leisure facilities. Most will want a furnished dwelling with a high standard of décor and a modern finish.
• Families want to be close to schools, amenities and green spaces and often want a home they can furnish themselves, with a secure garden.
• Students have to be able to get to their campus easily and many also want good access to sporting facilities and nightlife. As with other types of HMO, they will often expect the dwelling to be fully furnished and kitted out.

Attracting the best contract-holders relies on you being able to meet and exceed their expectations. So, once you’ve clarified your finances and investment goals, the best next step is to speak to a properly qualified local estate and letting agent. They will know which kinds of dwelling are most in demand from each type of contract-holder and have the least amount of stock available, and what you need to offer in order to attract the best of them.

If you would like to discuss how to move forward with your next investment or let, just get in touch with the team in your local branch.