How to become a landlord while you’re a student
Posted on 22nd August 22
A recent article in The Times shared details of a report by property company Cushman & Wakefield that concluded student rents have reached record levels – with the average student left with just 25% of their loan after paying rent in halls and to private landlords.
A study by the NUS published this summer also found that a third of students had less than £50 to live on a month after paying their rent and bills. And with private landlords demanding rents of over £200 a week in some of the most expensive UK cities, combined with the cost of living crisis, it’s no surprise that students are struggling to get by.
The good news is that you can get a mortgage when you are a UK student without handing over a deposit. Spare rooms in the property can be rented out to friends or lodgers and the income received used to help cover the mortgage payments.
The Buy for Uni mortgage allows students to purchase a property with the help of a parent who acts as a joint borrower. This means it’s possible for a student to buy a property and obtain a mortgage for up to 100% of the purchase price. The parent will be on the mortgage but not on the property deeds and their income can be used to help the application. Because the student is very likely to be a first-time buyer and will be living in the property, they will also qualify for a stamp duty exemption, provided the house costs no more than £300,000. There is no tax liability for the parent either, as it is the student’s name on the deeds.
Charlotte Williams was a 23-year-old international development and economics student at the University of Bath when she bought a property after becoming frustrated with a lack of savings. “My money was all going towards rent and essentially down the drain. I really wanted to put it somewhere sensible, but didn’t have enough to invest in something like stocks and shares, which I also didn’t know anything about,” said Charlotte.
“I did a lot of online research and came across Bath Building Society’s Buy for Uni mortgage. I spoke with my parents and they agreed it was the best thing I could do with my money.”
Charlotte bought the three-bedroom house for £290,000 with a 100% mortgage and spent £10,000 upfront on legal fees and furnishings.
“I rented the two rooms to friends, which gave me an income of £900 a month and completely covered the mortgage, and my share of the bills was around £50 each month,” she said. “As the landlord then if anything breaks of course you fix it, but I have been lucky that nothing expensive has gone. Just the odd lamp.”
Charlotte sees it as a long term investment and has no plans to sell the house once she graduates. Instead, she intends to either apply for a house in multiple occupation licence and let to students, or let it to a family.
She said: “Either way I will keep it as an investment. The past two years it has taken so much financial pressure off and I have been able to get by without having to work a part-time job.”
Wondering if there’s a catch? The Bath Building Society Buy For University mortgage has a lending cap of £500,000. The property must be suitably located with good transport links to the University being attended, and the student must have at least one academic year left on the course. Spare rooms can be let to other students subject to a lodger agreement / licence being in place. You can find out more about Buy For Uni mortgages here.
Your home may be repossessed if you do not keep up repayments on your mortgage.