Buy to Let student accommodation - Tips for Parents
Buy to Let student accommodation has risen in line with the UK's growing student numbers. According to UCAS, 413,000 school-leavers started their first degrees in autumn 2014. In London, one property investment firm claimed that students have overtaken finance workers as the biggest tenant market.
Parents of the aforementioned students and school-leavers who have the wherewithal to invest in buy to let properties may wish to combine this with providing quality accommodation for their student children while at university.
For these, we offer 10 tips when investing in buy to let student accommodation to improve their chances of success.
Want a Buy to Let Student Accommodation Conveyancing Quote? Call 0207 112 5388 or email us at help@shareamortgage.com.
10 Top Tips for Parents
1. Make it new
Modern houses with up-to-date, high-quality fittings and items like Wi-Fi and en suite bathrooms are likely to attract student tenants. When pitted against converted old houses, lacking modernity and which squeeze as many people into as possible into a small space, there is only likely to be one winner.
2. Locate near the college
Space for student car parking on campus tends to be the exception rather than the norm. So houses on college bus routes or within walking distance are very popular, understandably, with students. New-build estates are normally to be found away from densely-packed terraced residential areas and closer to public transport routes.
3. Act long term
You might initially just consider a one-bedroom or studio flat for your offspring. Buying a two-bed flat (or larger) means you can let to at least one more person. Future options are also wider because you can look to rent or sell to professional couples or young families.
4. Stick to mainstream apartments
Buying odd rooms in a block might prove to be unwise as they may not be accepted as individual properties and therefore you would not be able to use a mortgage for buying them.
5. Budget with care
Shop around and research widely - using moneyfacts.co.uk for example - to find the best mortgage for you. Lenders generally expect at least a 40% deposit if you want to get an interest-only mortgage, which are generally considered best for buy-to-let investors. Another standard stipulation is that rental income is 125% of the mortgage.
6. Fixtures and Fittings
New-builds normally have landlord-friendly items such as easily replaceable kitchen worktops and vinyl floors. It's worth buying window locks, particularly for the ground floor, durable decking if appropriate and a bike shed if space permits.
Students often put furniture under heavy wear and tear, so you should plan for replacing some items every two years.
7. Find the right student
It is highly likely that your own offspring will return to the family home for at least some part of the main holidays. However, if you can fill a second bedroom all year round, for example by making the room available for summer schools or attractive to international students, you may get an all-year-round rent. This will help your yield no end.
8. Use a letting agent?
The 15-20% of rental income that an agent soaks up is, at least, tax deductible. The expense should also be offset against neither having to find or vet tenants nor having people calling you late at night with queries or demanding that you fix a boiler.
9. Research who the best agents are
Any company you use should at least be in the Association of Residential Lettings Agents and have signed up to one of the three redress services. These are Property Ombudsman, Property Redress Scheme and Ombudsman Services: Property. You should be able to find out about the company's record of lettings to students and check its reputation with local student accommodation bureaux.
10. After Graduation?
Your options remain open after your offspring (hopefully!) graduates. You could sell - this might be the right strategy if the relevant college is building its own accommodation thus reducing the need for private landlords' lettings to its students. Otherwise, your purchase may remain a solid investment for future letting anyway.
Want a Buy to Let Student Accommodation Conveyancing Quote? Call 0207 112 5388 or email us at help@shareamortgage.com.
