University towns across the United Kingdom have seen a steady rise in property value in the past couple of years. An increase of around 20% equity was observed in the U.K., alone. This prompted new ventures such as buy to let setups, considering these properties as a new driver in the real estate industry. As a result, property owners are now tapping into this kind of real estate due to its steady demand for housing, optimal rental income, and increase in the long term value of the property. So how can students start their journey towards homeownership?
Factors To Consider In Buy-To-Let Properties
Proximity to universities is a driving factor for renters. However, added facilities such as having own bathrooms, wifi access and accessible transportation can also drive up the rental price. A definite arrangement should always be established if in case the owner decides to rent it out as a whole or have it rented out to multiple occupants. Such arrangements need proper licensing as a house in multiple occupations (HMO). Besides, the failure to do so may result in a hefty fine.
Own A Home Before A Diploma
It is undeniable that most uni students have limited means of income and incur debts in university fees alone. That is why BTL properties are the new avenue for students to establish investments while they study. Since property management companies and mortgage lenders tend to veer away from little to no income applicants, this reduced the chances of approval for student owners. However, this changed when the Bath Building Society implemented two ways for students to own a home. Students can apply to have their family’s property licensed or have their parents buy a property in their name with a security downpayment of around 20-50% of the costs under the guarantor mortgage setup. Other options may include applying for a loan instead.
Mortgage lenders can then assess the potential income of the property to calculate for the loanable amount. As a result, students can have the property rented out entirely or set it up for house sharing. Utilizing such properties ensures a long term investment while paying off the mortgage through rental income. This allows them the opportunity to have an innovative collection system in place to ease the transition of students in collecting rent money from tenants.
The demand for prime residency is high all year round making it a sound investment. Buy to let properties for students not only teaches them to start their journey for financial independence but also have them graduate as more than degree holders but also homeowners.
