Buying Into Education Townships

Benjamin Franklin once said that an investment in knowledge pays the best interest. Buying properties near education amenities has always had its up, tapping into the demands for rentals by students coming out of state. For instance, a favorite of college students – Wangsa Maju and Setapak in Kuala Lumpur, have always enjoyed good rental yields of 4% to 6%. This is no surprise, given their proximity to numerous education institutes like the Tunku Abdul Rahman University College, Institute of Childhood Education-Studies & Community Education, VTAR Institute, Malaysian Institute of Art and Dasein Academy of Art.

Another student-populated township is Bandar Sunway, housing universities such as INTI International University, Taylors University, Sunway University, The One Academy, Monash University and SEGI University.

Down south, Johor is poised to be the new education hub in Malaysia. According to the government-managed Invest Johor website, significant projects in this sector include EduCity, Bandar Seri Alam City of Knowledge and Pagoh University City, which house internationally renowned campuses from prestigious educational institutions.

However, when the Covid-19 outbreak in 2019/2020, in a departure from what used to be normal, students have had to switch to online classes. Physical activities have ground to a halt. Nonetheless, as the economy opens up and activities have started picking up, it is safe to say that demands have also made a come back.

Pros and cons of renting to students

Renting to students have its pros, being less fussy, they do not require the most modern appliances or nice decor compared with working adults or more matured tenants. This is an advantage for the owners as they get to save money on furniture, fittings and fixtures.

Not only that, a landlord would have a possibly easier time to look for tenants, as educational institutions will give property owners the additional advantage to advertise through student bodies or organisations instead of through paid advertising means or having to go through property agents to secure student tenants.

However, one should also note that a major challenge landlords face when renting to student tenants is late payment of rent. It is also not unusual to encounter problematic tenants who move out of the unit without any notification. There are also those who take it upon themselves to “refurbish” the unit without letting the landlord know.

Some steps to minimise the risk of renting to students would be to tailor their leasing terms to include clauses such as noise, maximum occupancy of the unit and damages or repairs that should be considered.

It is also recommended that the parents should be co-signees to the Tenancy Agreement so that someone other than the student is aware and responsible for prompt monthly repayments and damages.

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