Student Let Mortgages

With over two million students enrolled at universities across the UK, demand for student accommodation remains strong, making it an attractive investment opportunity. But securing the right finance for student property can be complex.

A student buy-to-let mortgage isn’t a separate mortgage product but rather a standard buy-to-let mortgage offered by lenders willing to finance properties rented out to students. However, not all lenders support this type of investment due to the additional risks associated with student tenants, such as higher turnover rates and increased property wear and tear.

That said, there are lenders who specialise in this niche, provided the borrower meets their criteria. Lender preferences often depend on factors such as property size and the number of tenants. First-time landlords may find it more challenging to secure funding, particularly for larger Houses in Multiple Occupation (HMOs), as these come with stricter lending and licensing requirements.

Similarly, a student let mortgage falls under the same category as a buy-to-let mortgage but is tailored for properties rented out on a short-term basis to students, usually following the academic year. These mortgages often come with specific lending criteria, such as minimum rental income requirements and restrictions on occupancy levels.

Student Let Mortgages are tailored for investors looking to purchase rental properties specifically for student tenants. These mortgages come with unique lending criteria, as student properties often have higher tenant turnover and require careful financial planning to ensure long-term profitability.

Student buy-to-let properties generally fall into two categories, and the type of property you invest in will impact mortgage availability and the overall application process.

Purpose-Built Student Accommodation (PBSA)

PBSA properties are specifically designed for student housing and are often located in high-rise buildings with modern facilities, such as security services, WiFi, and shared gyms. These properties are typically managed by dedicated student housing providers, which reduces the responsibilities of landlords.

PBSA investments are usually suited to experienced landlords or cash investors, as they do not qualify for traditional mortgages. Currently, lenders do not offer buy-to-let mortgages or alternative financing options for this type of student property.

Traditional Student HMOs

Many student properties are converted houses or flats with shared living spaces, falling under the category of HMOs. If a property is rented to up to four tenants, some lenders may allow standard buy-to-let mortgages without requiring an HMO license.

However, if the property is let to five or more tenants from separate households, or if it is taller than three storeys, it will be classed as a large HMO. In this case, landlords must obtain an HMO license, which is often a legal requirement and may also be necessary for securing a mortgage.

HMO licensing costs and renewal requirements vary by location, with licenses typically needing to be renewed every five years. Some local authorities also require planning permission for HMOs, particularly in areas where student housing is already in high supply.

Even with an HMO license, fewer lenders are willing to finance large student HMOs, making it crucial to seek guidance from an experienced mortgage adviser when considering this type of investment.