Written by: Danny Belton - Head of Lending
Gone are the days of dingy flats and questionable landlords. Today’s students look out for modern, well-equipped space, often in purpose-built developments or refurbished homes. This change reflects stricter regulations in the student letting sphere and a generation of students that are likely accustomed to better living standards.
Here's everything you need to know if you're thinking of getting involved with student properties:
Types of student property investment
There are two main routes you can take if you’re looking to get involved with student letting. Firstly, you go for a large house, which would likely be reconfigured so that one or two of the reception rooms become bedrooms. The students then share bathroom and kitchen facilities. This is a house in multiple occupation (HMO) setup. This is closer to traditional house share living. The second option is purpose-built accommodation, which is often part of an apartment. This means they’re often in, or close to, city-centres and the students' university or college.
The pros and cons of different student letting types
Both types of letting have different considerations you need to keep in mind, but some similarities exist. As a landlord, you need to abide by health and safety regulations, and fire safety is even tighter for HMOs so make sure you’re up to date with what’s expected.
For HMOs, you’ll need to check whether the property needs to be licensed and they may need more up-front investment to convert, but they can offer more flexibility. Should the market change, or student demand drops, you can still rent the property out as non-student accommodation.
Purpose-built accommodation can be more appealing to students, as they’re often closer and allow easy access to the perks of city living. Securing financing for these can be challenging, but they can be more convenient and easier to let out. Investors will typically be given guarantees on rental yield, especially if it’s a new build property. These developments are often also managed by a dedicated company. While more expensive on a rolling basis, it’s often justified for the convenience.
Try our free mortgage finder to get an idea of what's available and what you can afford.
Alternatively, talk to us today and let's discuss your options if you're thinking of getting into student letting.
Find your mortgage
Our mortgage finder searches thousands of different deals! So, you can rest assured, we'll help you find a deal that suits you.
Download our FREE buy-to-let guide
Get access to our jam-packed guide full of helpful information when you download. We'll also send you important industry news and information to keep you in the loop with what's happening in the mortgage industry.
Looking to get into student letting? Here’s the bottom line…
Student lets offer the potential for appealing returns, but you must make sure you’re planning thoroughly and doing your research. Explore each option carefully, considering the pros and cons for both HMOs and purpose-built student lets.
We always recommend getting professional advice to help ensure a smooth and successful investment. Working with an adviser who specialises in commercial buy-to-let is important, not only because they know the industry in and out, but because it can be difficult to find a mortgage for a commercial buy-to-let without going through specialist channels.
If you’re looking to dive into the world of student property investment, get in touch with us today and let’s discuss your options!
Frequently asked questions
There are two main types: large Houses in Multiple Occupation (HMOs) and purpose-built student accommodations. HMOs typically involve reconfiguring a larger house into multiple bedrooms with shared facilities. Purpose-built accommodations are modern, en-suite rooms or self-contained units, often located near campuses.
You need to be aware of local authority regulations, licensing requirements, and health and safety standards, especially fire safety regulations. HMOs often require a significant upfront investment for refurbishment to meet these standards.
Letting to students often results in low vacancy rates as students typically sign 12-month tenancies and plan their housing well in advance. Additionally, rental payments are usually secured by guarantors, often parents, which minimises the risk of non-payment.
Financing options vary. Purpose-built student accommodations often require commercial mortgages or cash purchases, while HMOs typically need specific BTL mortgages. It's essential to consult with a mortgage advisor to understand the best financing options for your situation.
Stay informed about local authority regulations, licensing requirements, and health and safety standards. Regularly maintain and inspect the property to ensure it meets all legal standards, particularly fire safety regulations.
Consider the terms of any rental guarantees, the realistic net yield, current market rental rates, demand and supply trends, and any potential changes in the student population in your area. Ensure that the purchase price is not inflated and aligns with comparable properties.
Related Articles
Becoming a landlord
Have you become an accidental landlord?
Does your EPC rating really matter?
Important information
There is no guarantee that it will be possible to arrange continuous letting of the property, nor that rental income will be sufficient to meet the cost of the mortgage.
Your property may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.