We’re now in December, the weather is getting colder and the days are getting shorter. But this also means that students across the country will be returning to their family homes for the Christmas period, no doubt looking forward to some home cooked meals!
This mass migration prompts the question, how big is the student landlord opportunity and what do potential investors need to consider?
There are approximately 2.3 million British students studying in higher education, meaning it can resemble an attractive opportunity for some. For properties in the right area, usually close to the university campus and entertainment venues, there is almost guaranteed demand year after year –and student lets are often arranged up to six months in advance which will minimise the risk of vacant periods.
Sometimes parents like to invest in properties that can be used by their children who are attending university and rent the other rooms to their friends or other students to cover the cost. It seems like a great idea but you must be careful of the complications.
Depending on the number of tenants, letting a property to a relative can be considered as a regulated buy to let which can restrict your number of options, this is why seeking advice can be important.
Despite this, student houses typically have more tenants and are often classed as an HMO which can make for a profitable venture.
HMOs currently produce higher average yields than any other property investment. According to Precise Mortgages HMO properties produced the highest yields in the first quarter of 2018, at 7.1% – 1.3% above the market average.
There are many things you should think about before considering investing in student housing like location, property must-haves, whether you should use an estate agent as well as more complex things like licensing following the HMO changes and marketing. There are also many different options available to you from many different lenders which is where using an adviser’s knowledge and expertise can be invaluable.
So, if you’re a current student landlord or potentially want to invest in a student property, contact your adviser today to talk through your options.