Investing in Property – Over the last few years, student housing has become very popular amongst landlords and has transformed over the last ten years into a global market. This is a result of the increase in students in need of somewhere to live; there has been an increase of 67 million students since 2000 to 2011.
James Pullan is the head of Knight Frank Student Accommodation and he has said, “Student property is one of the most successful real estate asset classes, thanks to stability of demand for student bedrooms from all over the UK. The market is still structurally undersupplied in all core university cities.”
Buying Student Property
One of the major things to consider when buying a property which will be let out to students is the location. If you do a little research before hand into which universities have a growing amount of applicants or are experiencing steady rates of application. This will increase your chances of your property being let. Another thing that should be carefully looked into is the amount of non-EU students that the university has. The universities that have a successful rate in recruiting overseas students often uphold a good reputation and again will ensure that your property will be let out.
On top of this you need to make sure you have the right type of landlord insurance. If you are renting a student property to three or more occupants who are from separate households you will need a House in Multiple Occupation (HMO) license.
Mortgage Options
Unfortunately for landlords wishing to offer a student property, there aren’t as many mortgage options as there are for other buy-to-let investments. This is because some lenders simply don’t allow students as tenants as well as the children of the investor to live in the home alone that has been purchased. Those who do lend for student properties are: Abbey, Leeds Building Society, Aldermore, Woolwich and Paragon Mortgages. However, they do usually assume that there is no need for HMO licenses or changes to the property.
If you do require an HMO license then the Mortgage Works does offer loans for small HMO’s up to a maximum of five tenants but you do need a deposit or equity of usually 35% or more to be accepted for one of their mortgage ranges. If you are in need of a larger HMO then Paragon Mortgages offers this service as it provides loans for homes that could have up to 20 occupants and has a maximum loan-value of 75%.
When investing in a property there are risks associated so make sure you have researched all options and have received financial advice first.