ARE MULTI-STUDET LETS A GOOD INVESTMENT?
When it comes to investing, you are left with a lot of options. Especially when it comes to the world of student lets and multi-lets.
But what exactly is the difference between multi-lets and student lets? How do you get your foot on the multi-let ladder? And where can you find the best deals?
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On this page, we will answer all these questions and more, taking a deep dive into the world of multi-lets and student lets.
Are you looking to get into the buy to let market and find potential property purchases with great rental yields? That’s something we can help with.
WHAT IS THE DIFFERENCE BETWEEN A MULTI-LET AND A STUDENT-LET?
Leeds is a growing city, and a northern hub when it comes to business. It’s continually becoming a more attractive proposition for many property investors due to the large investment in the area in recent years.
There are quite a few reasons that you should invest in Leeds, here are just a few of them:
- High demand amongst young professionals
- Business is booming with a mixture of large, medium and small businesses
- Student city with 3 universities, attracting thousands of students
- The cities is known for it’s high rental yields, which we’ll dig into more detail later!
CAN YOU GET A BUY TO LET MORTGAGE AS A STUDENT?
Yes, you can! However, it is worth keeping in mind that it will be significantly harder than if you were in a full-time job. This is because mortgage lenders will carry out an “affordability assessment” on you, which is performed on anyone who applies for a mortgage. It is designed to make sure that you can afford your monthly mortgage payments and as a student, you are unlikely to have a full-time job, leaving lenders to view you as high risk.
If you wish to secure a mortgage as a student, you will need a mortgage guarantor and a large deposit.
Mortgage guarantor
Should you find yourself in a situation where you will be unable to make your mortgage payments, your mortgage guarantor will pay the remaining balance in your loan. A guarantor can be anyone as long as they meet the following criteria:
- Own a property in the UK
- Be a resident of the UK
- Not be older than 65 at the time of application
However, they are usually your parents, grandparents, or legal guardian.
As your mortgage lender will be responsible for paying your mortgage, they must be able to prove that they have a minimum sustainable income. You will need a guarantor for not only security measures but also for their credit history. As a student, it is assumed that you will be a first time buyer and so you will have very little credit information.
Large deposit
The larger the deposit, the less lenders will consider you a risk. However, if you don’t have a large deposit it is not the end of the world. You can speak to your mortgage advisor as they may know of other mortgage products that do not require a large deposit.
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Start your property journey today
ARE STUDENT LETS A GOOD INVESTMENT?
Student accommodation is a great investment choice. It allows landlords to be able to cover the costs of their mortgage with the added benefit of rental income. There are also plenty of accommodation types to choose from when it comes to city locations for student living. However, with an official university accommodation to compete with and the hoops you may have to jump through, it can be difficult to decide whether or not managing student rental is for you.
Below we will take a look at some of the advantages and disadvantages of student lets:
Advantages of student Buy To Let
- A student buy-to-let can be a good opportunity to financially support your own children whilst they are attending university
- It is usually a long-term investment as students are always looking for good student houses and flats near campus
- Student buy to lets can often be very high yield as they are often done on a multiple occupancy basis and in turn provide a higher rental return than a single assured shorthold tenancy would
- You may be able to get a rent guarantor for the students rent to add a layer of security
- Whilst you will still have responsibilities as a landlord, students
- Halls of residence and official university student properties are often very expensive so there is usually an abundance of students looking for affordable alternatives.
Disadvantages of student Buy To Let
- As is the case with any property investment, there will, unfortunately, be no guarantee that the property will be consistently fully occupied so you will need to prepare for potential rental voids
- You will also need to factor in the possibility that house prices and the value of your asset may go down
- You will have housing health and safety regulations to adhere to
- When it comes to student accommodation, you will need to expect competition from other investors as well as from the university itself
- You will also need to be wary that some tenants may not treat your property with respect as they are only letting for a short amount of time
HOW TO GET A STUDENT BUY TO LET MORTGAGE?
Whether you are interested in letting student homes or student flats, you will first need to secure a buy to let mortgage. The first thing you will need to do is to establish your budget and exactly how much you are going to spend on this investment. This will help you decide on which property you will purchase.
The majority of lenders will advise that student buy-to-let is an avenue to be undertaken by experienced landlords only and not those who are new to the game.
Mortgage survey
Investments are always a risk, so it is wise to have extra funds available in case things do not go to plan. Deals can fall through at the mortgage survey stage, as surveyors can value a property based purely on bricks and mortar. This can result in a lower valuation than expected.
If you wish to receive the full mortgage rate you applied for, it is vital that you inform your lender that you plan to rent out the property to students. This way they can value the property based on its predicted rental income. This will also save you from having to cough up a larger deposit to make up for the property being undervalued.
Budget
Budgeting is one of the most important steps in the process. It is a good idea to decide on your budget before you start your search for student accommodation to purchase. Thankfully, most lenders will not require you to have a large amount of personal income in order to be accepted, however, it certainly won’t hurt your chances, as income will show lenders you will be able to weather the storm should you face void periods.
The exact amount that you will be able to borrow will depend upon the amount of rental income that you will be able to generate using your property, which will need to be 125% of the mortgage each month. Some will ask for as much
This type of goal should be fairly attainable with a student buy to let. This is because you will be receiving rent from each room you let out. This can typically range between £200 – £600 a month.
Eligibility criteria
In order to qualify for a student buy to let mortgage, you will need to meet the standard buy-to-let criteria, however, there are a few additional criteria you may have to meet. Every lender will be different, but here are some of the other factors that lenders may be on the lookout for:
Legal obligations: If you are purchasing a property that requires an HMO license, then the lender will likely need to see evidence of this.
Rental yield: It is worth bearing in mind that some lenders may ask for more than the typical 125% of the mortgage repayments. Some have been known to ask for as much as 180%.
Property type: Lenders will each have
Landlord experience: Because student lettings can often be a complex investment, you may find that some lenders are reluctant to lend to first-time landlords. It is possible to get a mortgage for a student let as a first-time landlord, however, it can often be difficult.
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Start your property journey today
HOW TO APPLY FOR A HOUSE IN MULTIPLE OCCUPATION LICENCE
If you want to turn a property in your portfolio into an HMO, you will need a licence or planning permission from your local authority. There are several conditions to an HMO licence, and there is also some cost.
An HMO licence is only valid for a maximum of 5 years, and you must renew it before it runs out. You must apply for a separate licence for each HMO you run if you have a more comprehensive portfolio.
To apply for an HMO licence and avoid receiving an unlimited fine for renting out an unlicensed HMO, you must abide by the following:
- The property is suitable for the number of people (which will vary depending on the size of the building and its facilities).
- The property manager or agent is considered ‘fit and proper’, meaning they have no criminal record or breach of landlord laws or code of practice.
- You must also send the council an updated gas safety certificate every year.
- You must install and maintain smoke alarms.
- You must provide safety certificates for all electrical appliances when requested.
Depending on the local council in which the property is located, they may add other conditions to your licence, like improving the standard of your facilities. You can appeal to the First Tier Tribunal if you do not agree with any of the conditions set.
Is Student Rental Profitable?
Student rentals have the great potential to be a profitable outlet for you. The demand for student lets and multi-lets has skyrocketed over the last few years and they have quickly become an investment hotspot.
BUY TO OPTIONS
These tend to be normal residential houses, 2 to 3 bedrooms terrace, semi-detached, detached or flats.
They are houses that are suitable for the average renter and are sometimes known as vanilla buy to let properties.
A House of Multiple Occupancy (HMO) is a rented property occupied by at least three people who are not from one household or five or more people, forming two or more households.
This type of Buy To Let is a freehold block which offers multiple, separate or independent residential units.
This can be a variety of different types of property such as blocks of flats or houses converted into flats.
This is very similar to HMO’s and even are often referred to as non-licensable HMO’s.
They have many characteristics of a typical HMO but don’t require the licence, but they may still require planning permission from your local authority.
As the name describes, this is a commercial premises and it is when you let the property out to one or more businesses.
It’s often referred to as Commercial Landlord Mortgage, Business Buy To Let Mortgage or Commercial Investment Mortage.
OUR LOCATIONS
Thinking of buying a BMV property, but have a specific area in mind? To give you an understanding of just how broad your property choice is, here’s the areas where we most regularly buy BMV property…
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Start your property journey today
EXAMPLES OF PROPERTY INVESTMENTS
Have we got your interest? Well, how do you know that we’re going to provide great deals? Just take a look at some of our recent sales in the area, they speak for themselves!
Want to see more of our deals? Check out our recent deals.
Buy Refurbish Rent Refinance
Scunthorpe, DN16
House, Semi-detached Freehold
25% BMV
Yield
8.3%
- Freehold
- Driveway
- Rear garden
- Close to local amenities and transport links
- Could achieve £700 – £750 pcm
- Vacant upon completion
Buy Refurbish Rent Refinance
Scunthorpe, DN16
House, Semi-detached Freehold
25% BMV
Yield
8.3%
- Freehold
- Driveway
- Rear garden
- Close to local amenities and transport links
- Could achieve £700 – £750 pcm
- Vacant upon completion
AirBnB
Bakewell, DE45
House, Terrace Freehold
22.1% BMV
Yield
15.2%
- Freehold
- Grade II listed
- £51,000 per annum gross rental
- £200 nightly average
- 70% predicted occupancy
- RICS £420,000 in current condition
AirBnB
Bakewell, DE45
House, Terrace Freehold
22.1% BMV
Yield
15.2%
- Freehold
- Grade II listed
- £51,000 per annum gross rental
- £200 nightly average
- 70% predicted occupancy
- RICS £420,000 in current condition
Refurb to Flip
Tadley, RG26
Bungalow, Detached Freehold
45% BMV
Exit Profit
20%
- Freehold
- Refurb opportunity
- RICS value £300,000
- Strong demand from owner occupier
- Great transport links
- 50 Miles from London
Refurb to Flip
Tadley, RG26
Bungalow, Detached Freehold
45% BMV
Exit Profit
20%
- Freehold
- Refurb opportunity
- RICS value £300,000
- Strong demand from owner occupier
- Great transport links
- 50 Miles from London
Buy To Let
Bradford, BD12 7DE
House, Terraced Freehold
24.3% BMV
Yield
10.8%
- Freehold
- 4.1 Miles to Bradford City Centre.
- 1.5 Miles to M606 & M62.
Buy To Let
Bradford, BD12 7DE
House, Terraced Freehold
24.3% BMV
Yield
10.8%
- Freehold
- 4.1 Miles to Bradford City Centre.
- 1.5 Miles to M606 & M62.
WHY SHOULD YOU INVEST WITH US?
While our investors database is great perk of our service, our team are the real reason you should buy your next investment property through us.
Without their extensive knowledge of BMV property, we wouldn’t be able to source you generously discounted deals, nor ensure your purchase is quick and hassle free. All ingredients that allow you to make wise investments and grow your portfolio fast.
It’s also our team that allows us to grow our relationship with you as an investor, even after your purchase has gone through. Buy your investment property through us and rest assured you’ll be far more to us than just a number – we’ll know you on a first name basis.
WHY SHOULD YOU INVEST WITH US?
While our investors database is great perk of our service, our team are the real reason you should buy your next investment property through us.
Without their extensive knowledge of BMV property, we wouldn’t be able to source you generously discounted deals, nor ensure your purchase is quick and hassle free. All ingredients that allow you to make wise investments and grow your portfolio fast.
It’s also our team that allows us to grow our relationship with you as an investor, even after your purchase has gone through. Buy your investment property through us and rest assured you’ll be far more to us than just a number – we’ll know you on a first name basis.