5 pros and cons of buying a student buy-to-let property

5 pros and cons of buying a student buy-to-let property

If you’re looking to build a property portfolio, you could consider buying a student buy-to-let (BTL) property.

Of course, there are different pros and cons to buying student property compared to the wider housing market. Here are five pros and five cons to consider before you buy.

The pros of student BTLs

1.A huge pool of potential renters

There were nearly 2.5 million students in the 2019/20 university year, and all of them will have needed somewhere to live during their studies.

That means there’s a healthy pool of potential renters, which is refreshed each year by newcomers.

2. You can own property in some of the biggest cities in the UK

Some universities are in the biggest towns and cities in the UK. That means, even if you can’t find specifically student renters, you’ll still own property in these places and be able to rent it out to non-students if need be.

3. Students aren’t fussy

While it isn’t always guaranteed, students tend to be less fussy than people looking to rent a home for their families.

That means you could fairly easily buy cheap property and find tenants each year without necessarily having to worry too much about upkeep.

4. Short-term contracts mean you won’t get stuck with bad tenants

A huge advantage to diving into the student BTL market is that students will often be gone within a couple of years, potentially even within just 12 months.

That means, if you end up with tenants that are a nuisance, you’re unlikely to have to deal with them for too long.

5. You can charge rent per room

To save money on costs, students nearly always live with housemates. That means you can rent out by the room, rather than the house.

This can be more lucrative than charging for the entire property. It can also be useful if you only manage to find one tenant – after all, it’s better to have some money coming in for a single room than no money at all.

The cons of student BTLs

1. Students are notoriously bad tenants

One downside to renting to students is that they can be bad tenants. They may not take care of your property adequately, leaving you to the foot the repair bill, or they can upset the neighbours with raucous parties and other anti-social behaviour.

You can get the university itself involved if they’re becoming a problem, which could see them punished or fined. But if not, you may find yourself on the receiving end of complaints.

2. Your properties will need to be furnished

As students aren’t staying long, they’re highly unlikely to have any of their own furniture to bring. That means your student properties will need to be fully furnished.

Providing furniture could cut into your profits, especially if your tenants don’t take care of it and you have to replace things.

3. Students will need guarantors

Students typically haven’t built up a credit score by the time they need to rent as they’re unlikely to have borrowed money before.

That means they’ll need guarantors for you to chase if they don’t pay their rent. This could make it more difficult for you to get what you’re owed if the students don’t pay up.

4. Your property will be vacant for months each year

The university academic year typically runs from around September to June. This could you put in the position of missing out on rent over the summer months if you’re unable to find a tenant between July and August.

It also means that your property will be vacant in these months, putting it at risk of getting burgled without anyone being there to report it.

5. Purpose-built student accommodation is serious competition

Potentially the biggest problem that student BTL landlords face is the competition from purpose-built student accommodation companies.

These developers have become more popular in recent years, meaning there’s greater competition for tenants.

This may mean that you have to offer lower rents, especially if these companies offer more competitive rates for students.

Find out more

If you’d like to find out whether a student property or any other BTL could be a good option for building your wealth, please get in touch with us at ProSport.

Email enquiries@prosportwealth.co.uk or call 01204 602909 to speak to one of our experienced advisers.

Please note

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

Buy-to-let (pure) and commercial mortgages are not regulated by the FCA.

Think carefully before securing other debts against your home.