Student Let Mortgage products explained for new and existing Buy to Let landlords within the student accommodation sector.

After a prolonged period off campus due the pandemic Student Lets and Student Let mortgage products are becoming popular again. 

Choosing the right property remains key particularly as privately owned super tanker complexes are springing up to offer students shared amenities such as gyms to entice them. 

In these frequently asked questions on student let mortgages we focus in on the traditional houses that comprise of rooms let to students. 

FREQUENTLY ASKED QUESTIONS ON STUDENT LET MORTGAGE

The student let mortgage market tends to sit at 25% to 30% deposit. There are exceptions from time to time.

A) You will need to your sums. The rental is normally higher as more households are contributing but there are natural void periods outside of term time. The students may not be so experienced at managing a property so trouble you for basic issues. They also might “as a collective” be less respectful of the property and neighbours; than say a professional tenant.

What I would say a property professional it is a way of adding diversification to your portfolio.

A) There is no maximum as such but the standard mortgage lenders tend to cap out between 3 to 5 bedrooms. Specialist lenders fill the space thereafter on higher product terms. 

A) There us a wide disparity with the terms the individual Student Let Mortgage Lenders apply. From everyone named on a single assured shorthold tenancy over 6 to 12 months; to separate agreements for each student; to corporate agreements with agencies. You will need to discuss this with your professional Mortgage Broker.

A) The default position is “yes”. Sometimes the Local Authority may agree to “no licence needed” and you would need this in writing to show the Student Let Mortgage Lender.

A) This will be because the locks are not allowed under their lending policy or that you failed to disclose this was a multi-let student accommodation to them at the outset.

A) From my experience this limited choice and can tighten the lending terms. For example the Student Loan Mortgage Lender might insist on a shared single tenancy. This makes eviction and rent collection of the individuals challenging. 

A) Most standard Student Let Mortgage Lenders offer both interest only and repayment mortgages and some allow part and part. However, the specialist lenders may not have this system functionality so 100% interest only may be the only option.

A) Yes, they would want demand to be good so would ask their Surveyor to comment on whether the location is one that attracts this type of let. 

A) A lot of the standard Mortgage Lenders look for a minimum earned income level of £20,000 to £30,000 (separate from the rental income on the subject property).

And, if you are a higher or additional rate tax payer a harsher rental coverage will be applied.

A) It will depend on the lender selection. Addition factors that will be considered will be the directors, shareholders, which country the company is registered in and whether the company has other functions outside of property holdings. You should speak to professional Mortgage and Tax Advisors.

A) Yes, there are a good number of Mortgage Lenders that will consider lending to Ex Pat’s. They would seek confirmation of the property management arrangements. The country you are in and company you work for will be important. Your UK credit profile must be still active and well conducted. Payments will also need to be collected from a UK bank account.

The mortgage terms will be higher to reflect the extra risk to the Lender.

A) A large number of Mortgage Lenders cap out at 3 mortgaged lets as they are required to meet extra “portfolio” assessment rules laid out by the Regulator otherwise This number would include buy-to-lets, student and holiday lets.

Over and above this they will have their own maximum number of properties with them and other lenders. They may further limit this if they are over exposures in a particular postcode.

There will almost certainly by other Mortgage Lenders available with a larger appetite so speak to your professional Mortgage Broker.

A) Normally, as there is less competition. Also a number of the building societies that offer this facility do so on discounted variable rates only rather than fixes.