As many parents across Surrey wave their offspring off to University this month, thoughts will inevitably turn to the rising costs of higher education. With the average charge for three years’ tuition fees now standing at £27,750, plus the additional outlay of student accommodation, it’s little wonder that some parents decide to investigate investing in student accommodation as a way of offsetting some of the expenditure involved. Recent research from property search portal Zoopla has revealed that university towns across the UK do offer some of the better rental yields available, with the North topping the charts in terms of being the most profitable in the sector with cities such as Edinburgh, Glasgow and Belfast all noted as currently the best performing areas for student lets. However, back in Surrey in nearby Kingston Upon Thames, Zoopla research also suggests that the average student rental now costs £2,438 per month, meaning that if the right property can be secured for investment, decent yields from student rooms are still available.
So, what are the key things for a parent considering investing in student Buy to Let to consider? Our founder, Monica Bradley explains, “A student property can provide medium-term solution towards the cost of housing a child who is studying at university, but it may also assist with a deposit for a first home later down the line. However, as many landlords in other sectors have recently encountered, taxation is now more complex both on rental income and at the point of purchasing a Buy To Let property, and therefore it’s crucial to obtain specialist tax advice to ensure that the numbers stack up before you start. Also, with regulation on landlords around Houses in Multiple Occupation (HMO) changing this October, together with increased legislation in the lettings sector in general, professional assistance with regards to the legal side of letting a property is also important to ensure that you stay on the right side of the law.”
Monica continues, “When it comes to raising a mortgage to fund the purchase of property that will be used as student accommodation, it’s worth bearing in mind that you will need a specialist product which only a few lenders offer. Although the terms of these vary between providers they normally allow for the child to live at the property whilst other rooms are let out to other tenants under formal tenancy agreements. But there are also likely to be specific clauses in terms of the amount that you can borrow and the fact that the property needs to be within a specific proximity to the University campus, as well as being your child’s main residence during their course. However, with careful financial planning, for some families, an investment in student accommodation can be a sound strategy.”