If you're in the market for a <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/buy-to-let-mortgages\/">buy-to-let (BTL)<\/a> property and want to let it to students, it's vitally important that you get the right advice before you proceed. While student BTL mortgages aren't much different from standard investment property agreements, you may find it more difficult to find a suitable lender because of the extra considerations that come with this type of tenant.\r\n\r\nThe good news is that getting a favourable deal on a student buy to let is absolutely possible. There are brokers who specialise in these arrangements, and our guide to student BTL mortgages has all the information you need in order to find one.\r\n<ul>\r\n \t<li><a href="#what-is">What is a student buy to let mortgage?<\/a><\/li>\r\n \t<li><a href="#pros-investing-student-let">Advantages and disadvantages<\/a><\/li>\r\n \t<li><a href="#student-let-lenders">Will I qualify for a student BTL mortgage?<\/a><\/li>\r\n \t<li><a href="#student-let-deposit">Deposit requirements<\/a><\/li>\r\n \t<li><a href="#affordability-student-let">Affordability<\/a><\/li>\r\n \t<li><a href="#rent-charge-student-let">How much rent to charge<\/a><\/li>\r\n \t<li><a href="#best-areas-for-student-let">Best areas to invest in a student BTL<\/a><\/li>\r\n \t<li><a href="#speak-to-expert">Speak to an expert<\/a><\/li>\r\n \t<li><a href="#faqs">FAQs<\/a><\/li>\r\n<\/ul>\r\n[feefo-banner]\r\n<h2 id="what-is">What is a student buy-to-let mortgage?<\/h2>\r\nA student buy-to-let mortgage is designed so you can borrow to buy a property that you intend to let out to students. There are two types of accommodation you might buy into if you are looking to rent to students; large houses you can restructure to maximise returns, or purpose-built accommodation set up as self-contained units or flats.\r\n\r\nThe mortgage specialists we work with handle these mortgages on a daily basis and are well placed to give you the right advice.\r\n<h3 id="student-let-good-investment">Are they a good investment?<\/h3>\r\nThey can certainly have their advantages, though the exact benefits they can offer may vary depending on whether you're a parent hoping to put a roof over your child's head while they make their way through education independently, or a landlord aiming to invest in what can be a potentially lucrative sector of the property market.\r\n<h4 id="parents"><strong>For parents<\/strong><\/h4>\r\nIf your son or daughter is soon to fly the nest for university, investing in buy-to-let student accommodation can seem an appealing prospect for many parents. Taking out a mortgage for a student buy to let can be a great way of contributing financially while your child is at uni, helping them save money on the usually extortionate cost of student rentals.\r\n<h4><strong>For landlords<\/strong><\/h4>\r\nIt\u2019s not just parents who are taking out mortgages for student accommodation; as it can attract potentially thousands of pounds in rent, it\u2019s a great investment for anyone who has the initial capital required - provided you\u2019ve done your homework and sought professional advice. It can be a viable investment for professional landlords.\r\n\r\nIt can also be a solid option if you want to put an inheritance or a bit of extra cash to good use; and can also a good way to help save for a <a href="https:\/\/www.onlinemoneyadvisor.co.uk\/pensions\/">pension<\/a>.\r\n<h2 id="pros-investing-student-let">Advantages and disadvantages of investing in student property<\/h2>\r\nThe potential pros of a student buy-to-let mortgage include...\r\n<h3>Advantages<\/h3>\r\n<ul>\r\n \t<li>Student rentals tend to be very expensive, and for parents looking for a way to financially support their kids through university, it can seem a great way to contribute.<\/li>\r\n \t<li>Whether you\u2019re a parent or not, if you\u2019re planning a long-term investment (i.e. if you\u2019re planning to rent out the property to other tenants after your child has graduated and moved on), this could be a very sound option. In the long term, house prices often increase, whereas there is no certainty on what the property market has in store in the short-term.<\/li>\r\n \t<li>Although there is more and more purpose-built student accommodation popping up recently, these can be very expensive, and the \u201ctraditional\u201d student house or flatlet remains the most popular accommodation choice.<\/li>\r\n \t<li>Typically students are undemanding and not particularly fussy about the state of their property, meaning you don\u2019t have to worry about dealing with minor niggles or investing in brand new, immaculate furniture.<\/li>\r\n \t<li>Renting out a student buy to let to multiple tenants (either individually or as a group) offers robust income security for you as a landlord. In addition, you can also ask that each tenant has a <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/guarantor-mortgages\/">guarantor<\/a> in case one or more student falls behind on their rent, meaning you are less likely to default on your mortgage payments.<\/li>\r\n<\/ul>\r\n<p id="cons-of-student-let">There are also these possible disadvantages to consider, but keep in mind that they won't necessarily apply to you, plus a mortgage broker would help you avoid any pitfalls...<\/p>\r\n\r\n<h3>Potential drawbacks of student BTL<\/h3>\r\n<ul>\r\n \t<li>If you\u2019re looking for a short-term investment a student buy to let may be a risky option. No one knows whether house prices are going to increase, fall or stay the same in the short term, so you could end up losing money.<\/li>\r\n \t<li>There is also downtime during holidays as well as other void periods to consider, but many landlords get around this by imposing a 12-month contract. Length of rental tenure is also limited, but this should be expected considering the nature of student lettings.<\/li>\r\n \t<li>Students are renowned for their partying lifestyles; you may have to deal with noise complaints or you may find that the tenants have damaged your property, so always consider this when calculating a deposit.<\/li>\r\n \t<li>The property may also need a Housing Health & Safety Rating, Energy Performance Certificate, annual gas check certificate which could mean that repairs or improvements are needed.<\/li>\r\n<\/ul>\r\n<h2 id="student-let-lenders">Will I qualify for a student buy-to-let mortgage?<\/h2>\r\nLenders typically assess student buy-to-let mortgages based on the following criteria...\r\n<ul>\r\n \t<li><strong>Rental income:\u00a0<\/strong>Does your rental income project cover the mortgage by at least 125%? Some lenders might ask for it to stretch to higher than this, and there are also providers who will only lend to people with personal income of at least \u00a325K.<\/li>\r\n \t<li><strong>Deposit amount:\u00a0<\/strong><a href="https:\/\/www.onlinemortgageadvisor.co.uk\/deposits\/buy-to-let-deposits\/">Deposit requirements can be higher for buy-to-let mortgages<\/a>. See the next section for full information about this.<\/li>\r\n \t<li><strong>Credit history:\u00a0<\/strong>Clean credit is always a bonus, but there are specialist <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/buy-to-let-mortgages\/buy-to-let-mortgage-bad-credit\/">bad credit mortgage<\/a> lenders for buy-to-let customers with various types of credit issues.<\/li>\r\n \t<li><strong>Property type:\u00a0<\/strong>Any type of property considered 'non-standard' (e.g. student HMOs) can be more difficult to get a mortgage on and might call for a specialist lender.<\/li>\r\n \t<li><strong>Legal requirements:\u00a0<\/strong>You might need to apply for a HMO license if your student accommodation fits the criteria for this property type. Read more in our <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/buy-to-let-mortgages\/hmo-mortgages\/">guide to HMO mortgages<\/a>.<\/li>\r\n<\/ul>\r\nBuy to let mortgages, whether it be for a student property, <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/buy-to-let-mortgages\/holiday-lets\/">holiday home<\/a> or another purpose, work in the same way as your standard investment property mortgage. A provider will loan you the money to buy a property over an agreed time period, and the loan will be secured against the property.\r\n\r\nAlthough it\u2019s the same concept, there are a few things to know about before you go about investing in student accommodation. Buy to let mortgages are perceived as a considerably higher risk for lenders than residential ones are, and as such mortgage lenders expect to be compensated for taking this on.\r\n<h2 id="student-let-deposit">How much deposit do you need?<\/h2>\r\nTypically, you will be expected to have a bigger deposit to be considered by most lenders - at least 25% or above (although a handful of specialist lenders can consider up to 85% loan to value in certain circumstances). For the same reason interest rates on BTLs tend to be higher than on residential mortgages, although of course, the larger your deposit the better interest rates you\u2019ll receive (those with deposits of 40%+ will probably be offered the best deals). However, there are a lot of competitive deals out there if you hunt around and go to an expert <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/buy-to-let-mortgages\/buy-to-let-brokers\/">buy to let broker<\/a>.\r\n<h2 id="affordability-student-let">How much can I borrow?<\/h2>\r\nThis will come down to the rental income for the property. Generally, this is established by the valuer who assesses the property at the point of application and will be based on other rental yields for the area in similar properties.\r\n\r\nTypically, these calculations must meet the PRA interest coverage ratios and rent needs to cover 125% of the mortgage interest (@ 5.5%) or more for higher rate taxpayers. Some lenders add increased stress testing here for higher risk lending such as HMOs and student lets, requiring to say 170-180% coverage.\r\n\r\nThere are some lenders that specialise in various types of tenant and each will lend different amounts. Thankfully the experts we work with handle these applications on a daily basis so make an enquiry and make sure you get the right advice!\r\n<h2>Do you pay stamp duty on student accommodation?<\/h2>\r\nWhen you purchase any buy-to-let or second property, you will be charged stamp duty at 3%, this is on top of any standard rates of tax. While you must pay 3% stamp duty on your buy-to-let investment, your mortgage interest can benefit from a maximum 20% tax credit. You can learn more in our <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/buy-to-let-mortgages\/buy-to-let-tax-implications\/">Buy-to-Let Tax Guide.<\/a>\r\n<h2 id="rent-charge-student-let">How much rent should I charge?<\/h2>\r\nWhen it comes to assessing your eligibility for a student BTL mortgage, lenders will often want to know your potential rental income rather than what your salary is. For this reason, you will need to be prepared and carried out the correct calculations to prove that you can afford a buy to let student mortgage. You need to be confident that your forecast rent will cover your mortgage payments comfortably (think around the 125% mark), as well as taking your other expenses into consideration.\r\n\r\nThe rent you price the rooms\/property depends entirely on the student rental market for the area. Charging \u00a3200 per week might be a good deal in London and a fortune in the midlands, for instance. It is, of course, recommended that you research and run these calculations before you buy!\r\n<h2 id="best-areas-for-student-let">Where is the best place to buy a student property in the UK?<\/h2>\r\nAs home to some of the most popular universities in the world, student accommodation continues to be well sought-after in the UK, despite any initial concerns raised after the result of the Brexit referendum. The high market demand provides a compelling case for those looking to invest in student buy to let houses or flats, and not just within high capital growth areas such as London, Brighton, Southampton, or other typically in-demand areas of the South East.\r\n\r\nCities such as Birmingham, Leeds, Manchester, Nottingham and Liverpool have all seen property values rise over the past couple of years, assisted heavily by landlords in the South selling up unprofitable BTL\u2019s and moving their capital up north. At the end of 2017, Bristol, Leeds and Nottingham were listed at the top of the charts for best cities to invest in student buy to let properties.\r\n\r\nOf course, as with any buy to let investment, it is important to understand your market and the area you\u2019re looking to invest in. Many students like to live in towns or cities which are dominated by other students so they are in the close vicinity of their friends.\r\n\r\nIn some areas, it is the \u201ccool thing\u201d to be close to campus, whereas in others it can be more commonplace to live closer to the city centre - so do some research into what people are seeking; weigh up property prices in the area to assess where the most financially beneficial location is to invest.\r\n<h2>What are the legal requirements of owning a student BTL?<\/h2>\r\nWhile you weigh up the pros and cons of taking out a buy to let student mortgage, you should also consider the additional accreditations you will need. A property that is let to five or more unrelated tenants (so almost every student house) will be classed as a house in multiple occupation (HMO), in which case you will need to be licensed by your local authority. This also applies is three or more storeys high.\r\n\r\nAn HMO license is valid for a maximum of five years, and initial costs will vary on location, how long you\u2019re licensing for, and the size of the property. As an example, a new application 1-year license for a student property in Oxford will set you back \u00a3420, and \u00a3315 for each recurrent 5-year renewal (provided all eligibility criteria are met), so consider these additional costs.\r\n<h2 id="speak-to-expert">Talk to a student buy to let expert today<\/h2>\r\nKnowing which mortgage lenders to approach for a student buy to let is by no means easy. Going to the wrong one comes with the risk of being rejected, offered unfavourable rates or ending up stuck in an unsuitable mortgage. But the good news is that help is available!\r\n\r\nWe work with a network of expert brokers who specialise in student buy to lets, and they can offer you bespoke advice about your application, make sure you're pair with the right lender, and help you out with any paperwork along the way.\r\n\r\nThrough our free broker-matching service, you can be paired with the perfect mortgage advisor for your needs and circumstances without lifting a finger. This will be a fully-vetted expert who has an impeccable track record when it comes to arranging student buy-to-let mortgages.\r\n\r\nCall 0808 189 2301 or <u><a href="https:\/\/enquiries.onlinemortgageadvisor.co.uk\/match-me-with-a-buy-to-let-specialist\/">make an enquiry online<\/a><\/u> and we'll set up a free, no-obligation chat between you are your perfect buy-to-let mortgage broker today.\r\n<h2 id="faqs">FAQs<\/h2>\r\nGot a question about student buy-to-let mortgages that we haven't covered so far? Take a look through our FAQ section to see whether your query is one we've answered...\r\n<h3>Can you use personal income to cover rental shortfalls?<\/h3>\r\nYes, some lenders allow this through a process called \u201ctop-slicing\u201d. Basically, it's where some lenders allow borrowers to \u201ccover\u201d rental shortfalls using their own income (if affordable). So if rental income will only afford a loan of 100k and you need 120k, you\u2019d need to prove you have the personal income to cover this.\r\n<h3 id="bad-credit-student-let">Can I get a student BTL if I have bad credit?<\/h3>\r\nAs with any mortgage application, poor credit history can be a big no-no for lenders. When it comes to student BTLs, and BTLs in general, this can be even more of an issue.\r\n\r\nThis is because if you fall into financial difficulty, it\u2019s likely you\u2019ll prioritise your main residence rather than the second property, and will, therefore, be more likely to default on payments for the second.\r\n\r\nHowever, some lenders are flexible and may offer decent rates to those who have had a history of bad credit. They may require you to have a larger deposit together to instil more confidence, but a lot of it comes down to how recent and how severe the bad credit issues have occurred.\r\n<h3 id="student-let-joint-mortgage">Can a student BTL be a joint mortgage?<\/h3>\r\nWhile it is possible for parents, for example, to help their student offspring by taking out a joint mortgage for a BTL, it is not as common these days since the additional 3% stamp duty on second homes came into effect. A more financially beneficial arrangement may be to gift your child the cash, or for parents to take out a mortgage and act as the guarantor(s).\r\n\r\nAnother option is a \u2018<a href="https:\/\/www.onlinemortgageadvisor.co.uk\/mortgage-application\/joint-borrower-sole-proprietors\/">joint mortgage, sole title<\/a>\u2019 arrangement, where parents are named on the mortgage and are liable with their child for repayments. In this situation, parents don\u2019t have ownership rights on the property, so they won\u2019t be liable for additional stamp study or capital gains tax issues they would be if they were joint owners.\r\n<h3 id="how-many-student-occupy">How many students can occupy a BTL?<\/h3>\r\nAs covered, all BTLs accommodating five or more tenants must have an HMO license. While there is no limit as to how many students can occupy a BTL, there is additional licensing to consider if this is this case. Before granting any additional licensing, the local authoritative body must be satisfied that:\r\n<ul>\r\n \t<li>The property is suitable for a certain maximum number of people to live there.<\/li>\r\n \t<li>The person holding the license and the person managing the HMO are fit to maintain the property and ensure it is managed correctly.<\/li>\r\n<\/ul>\r\n<h3 id="letting-btl-to-family">Can I let a student BTL to a family member?<\/h3>\r\nHistorically, lenders have been dubious about allowing BTL investors let to <a href="#parents">family members<\/a>. Most mortgage providers require that you charge your tenants rent at a rate of 125% or higher, so letting to a family member at a reduced (or free) price is legally quite an \u201ciffy\u201d move (unless of course, you charge the remaining tenants a considerably higher rate to cover the cost of the related tenant - but then there are other tax implications to consider).\r\n\r\nHowever, there are a few lenders out there that have launched new <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/buy-to-let-mortgages\/regulated-buy-to-let-mortgages\/">\u201cfamily buy-to-let\u201d schemes<\/a>, which allow borrowers to legitimately let the property to their children, or other close family members, at a considerably lower rate.