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Students, as a collective, provide a big risk to lenders as they tend to generate little income and possess significant debt, as well as proving to be problematic tenants for landlords. 


In order to obtain a student buy-to-let mortgage, lenders add another set of criteria onto their existing criteria for landlords to pass. Lenders tend to wan to know how many rooms will be let in the property, if there are privacy locks and whether it is in an area with a high population of students. 


What’s the difference between a student buy-to-let and a buy-to-let mortgage? 


Usually, a buy-to-let mortgage is for properties that are to be let to people from one household (e.g. a family), whereas student buy-to-let mortgages are to be let to multiple people from different households (e.g. a group of friends who met at university from different parts of the country.) 


You may also need a HMO licence for a student buy-to-let property. 


What is a HMO license? 


A HMO licence is for a house in multiple occupation. 


A house is defined as multiple occupation if it is rented out by at least three people not from one household, but who share facilities such as the kitchen and bathroom. 


You will need a HMO licence if all three of the following apply: 


  • your property is rented to more than five people from one household 

  • your property is at least 3 storeys high 

  • the tenants in the property share communal facilities such as a bathroom or a kitchen 


You may also require a licence if your property is smaller and rented to fewer people than described, but you should check with your local council. 


Are they worth the investment? 


As with all investments, you will have to determine the return on investment (ROI) that you can expect from your student property. 


As a student property will be let to multiple occupants, you should work out how much you expect from each bedroom, and then figure out a total. You can then work out how much you plan to spend on improving the building, and the cost of the mortgage payments, to reach your expected profit. 


One key thing to remember is that unlike regular buy-to-let properties, student properties are only rented during term time, which equates to 35-40 weeks per year. 


For advice on getting a mortgage with bad credit, or if you’re in an active IVA, speak to one of our expert advisers who will be able to help you with the next steps.