Advice for student property investment

Recent changes mean that top universities can now take in more top students, which is driving up the need for student accommodation making it the perfect time to invest in property to let to students. Student property investment has its own nuances to consider however, and here we list some of the details you need to know before making an informed decision on investing in student buy-to-let properties. Visit this site to browse investment opportunities and access more detailed information.

Student buy-to-let

Buy-to-let property investment gives you income through the rental income from tenants exceeding the associated management and legislative costs, combined with growth of the property value. This form of investment enables you to gain a regular revenue stream with the potential of long-term gains as time goes on.

Student rental properties is typically housing where there are more than two tenants. Many rooms in a property will be converted into bedrooms. As the tenants are not part of the same family, student properties fall under the ‘houses in multiple occupation’ (HMO) licensing scheme. In most HMO properties, each tenant would rent out each bedroom separately and share the communal area. However, most student properties have joint contracts that cover all the tenants.

Pros of student buy-to-let properties

  • With different rooms being adapted into bedrooms, student properties can have great investment returns. Students are less fussy about space so the number of rent-paying tenants in a property can be maximised.
  • Student contracts are usually for fixed terms, typically one year. This adds some certainty to the state of your investment as you have a guaranteed revenue stream for set periods of time.
  • Singular contracts add to this certainty of investment thanks to the joint liability for rent. If one tenant leaves unexpectedly or stops paying, the other tenants will be liable for that person’s share of the rent. Difficult tenants do not necessarily mean a halt in income.

Things to consider

  • HMOS require more legislative and licensing to set up than traditional buy-to-lets and in some areas are being restricted by local authorities.
  • Although fixed student contracts offer stability for that period, the student ‘cycle’ means that more often than not the tenants will change year-on-year. In most university cities there will be no shortage of prospective tenants, so this shouldn’t be an issue. This will require some level of marketing however, to attract the new student tenants.
  • The turnover of student tenants will also mean that the property will need to have inventory checks and appropriate cleaning that matches this regular turnover.
  • Using a letting agency is the easiest and most hands-off way of handling marketing and inventory issues. As a result, there will be the associated letting agent fees.

 

Student buy-to-let investments are different to other property investments. Although there are some key differences to consider when investing, the large revenue potential from the investment is unparalleled. With the key details in mind, student property investment can be a great addition to your investment portfolio.

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