Invest in Student Accommodation | Student Buy To Let Mortgage

Thinking of investing in student accommodation? It can be a smart financial decision, offering potentially high returns. Our team of buy to let student property experts guides you through every step of the process, ensuring a smooth and successful investment journey.

What is a student buy-to-let mortgage?

A student buy-to-let mortgage is a type of financing that allows you to purchase a property specifically for renting it out to students. These mortgages are offered by lenders who are willing to lend on student properties, which are often seen as higher risk by some lenders.

Key features of student buy-to-let mortgages include:

Lending on student houses and purpose-built student accommodation (PBSA).
Higher rental yields compared to standard buy-to-let properties due to multiple students renting.
Potential for capital appreciation of the property value over time.
Higher deposit requirements than standard buy-to-let mortgages.

To qualify, you’ll typically need to meet criteria such as a minimum income, good credit history, and the property meeting certain standards for student occupancy.

Using a mortgage broker can help you find the most suitable lender and deal for your student buy-to-let investment.

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Plan Your Student Property Investment

What is the criteria for a student Buy-to-Let mortgage?

Types of property can use for student accommodation

To qualify for a student buy-to-let mortgage, property investors typically need to meet the following criteria:

Minimum deposit of 25% or more.
Minimum income of at least £25,000.
Ability to complete the mortgage before age seventy.
Experience as a landlord – some lenders require prior experience, while others accept first-time landlords.
Rental income must cover at least 125-180% of the mortgage payments.
Property must be located in England, Scotland or Wales.
Loan amount between £2m – £45m.
Lender may send surveyors to value the property.
If renting to 5 or more unrelated tenants, an HMO (House of Multiple Occupation) license is required.
Purpose-built student accommodation (PBSA) properties are often cash-only investments.

Lenders will assess the potential rental income on a room-by-room basis for houses of multiple occupation (HMOs) and shared apartments.

What types of property can you use For Student Accommodation?

Several types of properties can be used for student accommodation:

Houses of Multiple Occupation (HMOs): These are traditional houses rented out to multiple students, often with shared living spaces and bathrooms.
Purpose-Built Student Accommodation (PBSA): These are specially designed buildings that provide individual rooms or suites, often with shared amenities like kitchens and lounges.
Flats and Apartments: Many students choose to rent individual flats or apartments, especially in urban areas close to universities.
Shared Houses: Groups of students often rent a house together, sharing the costs and living spaces.

Each property type has its own advantages, depending on location, rental yield, and student preferences.

How to Invest in student buy to let property?

To invest in student buy-to-let property, follow these key steps:

Research locations with universities and high student populations. Look for areas with good transport links and amenities.
Decide on the type of property to invest in – either a house of multiple occupation (HMO) or purpose-built student accommodation (PBSA). HMOs offer higher yields but require more management.
Find a suitable property that meets student needs, such as having at least 3-5 bedrooms, living space, and amenities like a washing machine.
Ensure the property meets all legal requirements for student rentals, such as having the necessary licenses and safety features like fire alarms.
Market the property to students well before the start of the academic year, as most search in November for the following September.

The key is choosing the right location, property type, and managing the legal and financial requirements. With high demand and yields, student buy-to-lets can be a lucrative investment for experienced landlords.

Pros and cons of buy to let student property

Advantages of buy to let student accommodation

University apartment blocks are very popular with first-year students, which could be a good move; however, students’ homes that allow friends to stay with each other are often the better option as there is more demand for this.
There is always a demand for student accommodation, so it can be a great investment opportunity for those looking to receive more rental income. Having a few could boost your gains significantly.
Mortgage payments are less of a hassle since there is a tenancy agreement in place, often signed by the parents. This also means that sometimes payments are made in advance, such as for a whole term. This is why it’s seen as a way of a secure continuous income.

Disadvantages of buy to let student property

Student Property Investment is seen as a long-term investment rather than for the short term; therefore, it should align with your investment goals. Income received from the student let can be great but starting off can often be expensive, so profits will not show instantly.
Student HMOs have a higher start-up cost as, in most cases, the property would need to be refurbished. Even if a property is already built to HMO standards, it may need to be upgraded using new furniture and decorations for students to stay.
Often with student accommodation, management costs are far greater than renting a home to your typical family. This is because many people are sharing one home, and agents may incur some problems along the way.
Young adults and students tend to party a lot when being around friends, which means that maintenance costs will be higher as students may not keep the house clean and need time to get used to living away from family homes.
Lastly, there is much more legislation regarding student buy to let compared to your normal buy to let. You will need to correspond with this accordingly, or potentially huge fines could be thrown your way or even imprisonment in severe circumstances.

Frequently asked questions about student BTL Mortgage

How much deposit do you need to get student buy to let mortgages?

As with most mortgages, you must have a deposit before applying for the actual mortgage. Most lenders would ask for 25% but having a greater amount such as 40% is better as that’s when lenders can offer you the best rates and deals on the market. On the other hand, there are some lenders who are willing to offer you a mortgage amount with a deposit of less than 25% however the interest rates will be far greater and lender fees can increase as well.

Do you pay stamp duty on student accommodation?

No! You do not have to pay Stamp Duty for student buy-to-let mortgages.

Can I let a student BTL to a family member?

For this circumstance, you will need a family buy-to-let mortgage rather than students buy to let mortgage. This is also known as a regulated buy to let mortgage and is a niche mortgage type.

Can I get a student BTL if I have bad credit?

Yes. There are many lenders in the market who are willing to offer you a mortgage with bad credit. However, the rates and fees will not be as nice to you as those with a perfect credit history.

Is student letting profitable?

Student letting is seen as profitable if you make the right decisions in the process. Speaking to a specialist advisor can help you with this. Profits may not be seen as instant as the start-up cost is high; however, it can create a secure income after this stage.

How long is a student BTL tenancy?

In most cases, the agreement would be for 12 months, and there is no chance of it being broken before then unless certain rules are broken.

Invest In Student Accommodation With Student Buy to Let Mortgages

What is a student buy-to-let mortgage?