Updated: December 17, 2021

Buy-to-Let Mortgages for Student Accommodation

Looking for a mortgage for buy-to-let student accommodation? Our guide tells you exactly how to get one at the best rates.

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Pete Mugleston

Author: Pete Mugleston - Mortgage Expert

Updated: December 17, 2021

Student accommodation can be a lucrative market for buy-to-let landlords, if you know where to turn for the right advice.

To help you find it, we’ve put together this guide to student buy-to-let mortgages, and here, you’ll learn what lenders will offer, the different options available, and what you’ll need to qualify for the finance you need.

Can you get a buy-to-let mortgage for student accommodation?

Yes! Of course you can. From specialist providers to some high street banks, there’s a wide range of mortgage loans available for student accommodation. The way student buy-to-let mortgages work is similar to a standard buy-to-let mortgage, but there are some additional affordability and legal requirements that we’ll cover in more detail later in this article.

Buy-to-let student mortgages are specifically for property that will be let out to tenants who are still in full-time education. These are typically large houses or flats with purpose-built rental units that cater specifically to students’ needs.

There are buy-to-let mortgage brokers who specialise in student accommodation, and they can help you get the best deal by making sure you find the ideal lender for you, first time.

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How to get a BTL student mortgage.

Follow the steps below to prepare for your BTL student mortgage application…

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Check your affordability and calculate rental estimates

As with all mortgage applications, it’s important to check your credit score is healthy and up to date. You’ll also need to establish a rental estimate for the property you want to buy, that’s the whole property, not just the rental return per room.

You can get this from local letting agents and you’ll need to have it on hand to demonstrate to lenders that your mortgage income will make up at least 125% of your loan repayment.

Prepare your paperwork

In addition to having your proof of income and address prepared, you should have documents showing ownership for any existing property you already hold (some lenders prefer to lend to experienced landlords), as well as documents with details of the property you would like to purchase, including an official rental income projection from an ARLA-accredited letting agent or an estate agent.

Speak to a mortgage broker who specialises in student BTL

Now that you have your finances and paperwork in order, it’s time to find the best lender. You can do this by contacting a mortgage broker who specialises in student accommodation. They can take you directly to your best rate mortgage offer and guide you through every step of the application process.

Properties that are ‘non-standard’ like larger student accommodation may require a specialist lender and a broker is best-placed to help you find the right one.

Make an enquiry with us and we’ll match you with a mortgage broker who specialises in student accommodation today.

Eligibility requirements

The eligibility requirements for a student accommodation mortgage are as follows…

Landlord experience

Many lenders require previous landlord experience for student buy-to-let mortgages. This is because large student accommodation can be both a considerable investment and require careful management. But if you don’t already have landlord experience – don’t despair – there are some niche lenders who will accept first-time landlord’s for student BTL.

Rental income & mortgage loan ratio

Lenders will carry out stress-tests to see if your potential rental income will be big enough to cover your mortgage repayments. You will need to have evidence from qualified letting agencies that your rental income will cover at least 125% of your mortgage payments – some lenders require the rent to make up as much as 180%.

For example, based on a stress-test of 125%, if your mortgage is £1,000 per month, your property will need to earn at least £1,250 per month.

How much deposit you’ll need

Deposit requirements for BTL student mortgages are typically more stringent than they’d be for other standard property. Most lenders will require you to have a minimum of 25% deposit.

A select few lenders will approve applicants with smaller deposit sizes – but you’ll likely need a broker to help you find them.

Your lender may send surveyors to value the property

Many lenders will send surveyors to value the property in question – and this is where some deals may fall through, especially where the surveyor gives a lower than expected valuation.

This is where it can help to work with experienced brokers who can take you directly to specialist lenders who understand the potential rental income for student property and base their calculations of value on this figure rather than a surveyor’s brick and mortar pricing.

Additional legal requirements

If you rent the property to five or more unrelated tenants you will need to apply for a House in Multiple Occupation (HMO) license at your local authority. Your HMO license will be valid for up to five years and initial costs are likely to be in the several hundred pound range but will vary depending on the size of the property.

Before giving you approval for the HMO license, the local council will check whether:

  • The property is suitable for a maximum number of tenants.
  • The license holder and person managing the HMO are capable of maintaining and managing the property.

Pros and cons of investing in student accommodation

The benefits and potential drawbacks of investing in student accommodation depend on what type of property you’re buying, but generally speaking, the pros and cons are as follows…

  • High demand and a resilient market
  • Can be let to non-students outside of term time
  • Summer downtime gives you the chance to renovate/redecorate
  • Students can be reliable tenants due to the loans they have access to and the potential for parents to act as guarantors

Potential drawbacks include…

  • Student lets are not long-term agreements
  • A high turnover of tenants can mean more paperwork
  • Offering a property unfurnished isn’t usually an option as the vast majority of students won’t have their own furniture
  • Some student property types, such as HMOs, can be more difficult to get a mortgage on

Are interest rates higher for BTL student mortgages?

Yes. Interest rates for BTL student mortgages are likely to be higher than they’d be for residential mortgages, but as with all mortgages, factors such as your deposit size, age and income will all play a role in determining the offer a lender will give you.

Really great deals on interest rates will start at a deposit size of about 40%, but if you work through an expert mortgage broker with thorough knowledge of the lender market, you’re guaranteed to find the best possible rate for your situation.

Getting a ‘buy-for-uni’ mortgage

If you’re a parent looking into getting a mortgage for your child who is getting to uni, there are some lenders who cater specifically to your needs with a ‘buy-for-uni’ mortgage product.

This is similar to a guarantor mortgage: your child will be able to take out a mortgage loan but will need a minimum deposit of 20%. If they have less than 20% deposit, you’ll need to either use your property as collateral or pay into a special savings account.

One of the benefits of getting a buy-for-uni mortgage is that your teenager will be eligible for first-time buyer stamp duty exemption. This means you won’t have to pay the 3% stamp duty surcharge for investors on all homes purchased for up to £300,000.

Get matched with a buy-to-let mortgage broker today

Buy-to-let student mortgages can be a lucrative investment, whether you’re a portfolio landlord, or a parent looking to help your child get a headstart. But finding the right lender is crucial to making sure your investment is worthwhile – on a larger student accommodation loan, even a fraction of a percentage difference on the interest rate can make a big difference to your bank balance in the long-term.

We specialise in supporting people on their journey to property ownership – the brokers we work with specialise in student accommodation mortgages. They are pre-screened, highly experienced and will go the extra mile to find you the best terms and rates on your mortgage.

If you contact us on 0808 189 0463 or make an enquiry, we’ll connect you to a broker who can save you time, money and hassle.

Ask us a question

We can help! We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in Buy-To-Let mortgages. Ask us a question and we'll get the best expert to help.

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Pete Mugleston

Pete Mugleston

Mortgage Expert

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

FCA Disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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