Advice on whether to purchase house for letting to students

stuartajj

I am due to come into an inheritance which would enable me to put down a large deposit on a property. I was looking at purchasing a two houses with all the relevant license needed to rent to students for an average price of £200,000 and putting down a 25% deposit. This would be on a buy to let interest only mortgage. The houses would have 4 bedrooms each. Ive read a bit online about new taxes etc coming in but don't really understand any of it, So i am unsure of whether this sounds like a good idea if anyone has any alternative advice or guidance this would be much appreciated.

booksurr

the advice and guidance would be if you don't understand what you have read then read it again.

there are far too many things you need to know about being a LL than can possibly be written in a meaningful manner in a few sentences or question and answers on a forum

start with GM's attempt at a guide to letting (assuming Eng/Wales)
https://forums.moneysavingexpert.com/discussion/5180214

TBagpuss

...but don't really understand any of it...

This probably isn't a good starting point, then!

I think there are two key issues.

One is whether you want to tie up all of your inheritance in one type on investment. That depends on a range of things including looking atwhat other savings or investments you have, your attitude to risk, long term plans etc.

The other is about how well you understnad the risks and responsibilities of becoming a landlord. I'd suggest that you consider joining a Landlord's Association so you have access to advice and other resources.

Make sure that you do your sums right, taking into account costs of maintaining the properties, doing the necessarychecks etc, legal advice, advertising, cost of void periods etc to work out whether you can afford this and what kind of return, realistically, you might expect.

I'm not a landlord but would think that letting to students is more labour- and cost-intensive than other residential lettings as you will have a high turnover of tenants, 4 lots of checks per house per year rather than one as would woould if you were letting to a family and so on.

I'm not sure which specifc new rules you are thinking of. There are new rukles about checking that all renants are legally entitled to be in the country ("right to Rent"), new stamp suty rules which means that you pay a higher rate of Stamp Duty on any 2nd or subsequent property, and recent changes to the rule about what expenses are tax deductable.

If you have not ben a landlord before, it might be sensibkle to consider starting with a single property, and not commiting all of your inheritance at first. That way, you have the remainder of the inheritance to draw on if expenses are higher than you anticipate, and you are not outting all your eggs in one basket.

A lot of the recent rule changes seem to be aimed at making it less attractive to be an 'amateur' landlord rather than a professional letting company, and while none of us can know what will happen in the future, it may be worth bearing that in mind!

TBagpuss

Another option would be to pay for some advice from a proper independent finacial advisor. There are options to invest in property without being a landlord yourself, and if you have £100,000 to invest, paying a few hundred pounds for some proper advice is probably a wise move!

kinger101

If your are currently a higher rate tax payer, or are likely to be in the near future, getting 75% mortgages sounds like a very bad idea.

agrinnall

At least one, and possibly both, of your two investment properties will attract the additional 3% SDLT.

AdrianC

I don't see anything in your post giving any indication of the kind of yield you expect, after voids and agent fees, or how much of the work you'd be willing to do yourself. Have you considered those?

Cakeguts

Student accommodation can be a bit risky. Many universities are now building their own.

teddysmum

Although the inheritance will provide a good deposit, will you then have sufficient income to maintain the properties in both repair and interest payment, bearing in mind that student lets are academic term based leaving voids with no income ?


Have you actually found a lender willing to let you take two btl mortgages, especially if you aren't already a home owner ?

Davesnave

Cakeguts wrote: »

Student accommodation can be a bit risky. Many universities are now building their own.

I agree. :T Often horrible places, frequently run by grasping individuals with an eye for screwing the young and inexperienced for every penny they can.

jayss

I thought they'd stopped building their own and it was unite and the like flooding cities with private halls.