What to look for when investing

Make sure you start with the maths. Buy-to-let lenders typically look for rental prices to cover 125% – 150% of the mortgage repayments. Many banks also now look for 25%+ deposits of the price of the property. Some of the best buy-to-let mortgages also attract higher arrangement fees or additional fees within the mortgage. When you are looking at your figures, remember to include your maintenance costs as part of your figures and also potential increase or decrease in mortgage rates.

If you are new into the world of buy-to-let investing, make sure you are aware of the taxation implications alongside the updated regulation relating to having a buy-to-let portfolio.

Investing in property is all about balance. Investing in buy-to-let involves committing large sums of money towards the deposit and potential renovation of a property and typically involves purchase costs including a mortgage. When house prices rise, this can mean that it is possible to make big leveraged gains above your mortgage debt, but when they fall your deposit gets hit and the mortgage stays the same. But, if rent is coming in at the same time this balance can once again go into your favour. Typically, within student lettings, this rental amount is considerably higher than a typical residential / family let. Therefore, for a potentially only smaller higher risk the reward can be significantly greater.

Why not ask friends or family if they have experience in letting? Or speak to your local agency or any staff member at Nicholas Humphreys. Because we have experience in letting our investors properties in student and professional areas across the UK we have a wide base of knowledge and previous experience to draw from in order to best guide you through the mine-field of investing. 

The best areas to invest in student lettings are not always necessarily based upon cost price of the property in that area. We can help you match the sort of property that you can afford to the locations that would be best for purchasing. Many accidental landlords end up owning properties that are close to the area that they themselves reside in. When deciding on commencing into buy-to-let properties or purchasing a portfolio, the better decision tends to be taking expert advice to look at the areas that can bring you in the largest rental yield and / or can be let easiest.

Cast your net wider than the area that you reside, particularly looking outside of central London. Towns and cities that have a high student population are likely to be able to offer a larger return on your investment.

Students have different demands to the traditional private rented sector properties. Some, are looking for the comforts they have at home potentially including en-suite accommodation, a modern and well equipped kitchen, sometimes with the ability to park their car. Others, are more price conscious and are looking for clean accommodation but are satisfied with more basic amenities maybe sharing a bathroom between 3-4 tenants. More than 4 tenants tends to demand a minimum of 2 bathrooms in the property and you also need to satisfy HMO regulations.

A few things are certain with student investment properties, gone are the days when single beds were satisfactory to a student. They are used to living in ¾ (4 foot double beds) in halls of residence and more than likely their bed at home is a double bed. Students are no longer happy living in properties that are outdated, so modernisation is key. Accommodation is more likely to be handed back to you at the end of the tenancy in a better condition if it has been offered in a well-presented and clean manner at the commencement of the tenancy.

Certificate Of Lawfulness

If you need a formal decision from your council to show that your existing use or development is lawful, then you can submit an application for Certificate of Lawfulness. Further information regarding lawful development certificates can be found on the government website: https://www.gov.uk/guidance/lawful-development-certificates

Selective Licensing

Again, this licensing is not national and is at the discretion of the individual council. Unlike the mandatory and additional licensing, selective licensing can affect any property in the area regardless of the number of bedrooms or occupants. Selective licensing can be introduced to a particular road, ward area or across the whole of the council output areas. Check your local council website as to whether there is a selective licensing scheme in an area you are looking to invest in.

Selective licensing is a scheme that has been implemented to raise housing standards and landlord standards in areas of anti-social behaviour primarily but also aid the council in monitoring that landlords are ‘fit and proper’ and that the properties in the council area meet required housing standards.