Haunted houses

Property author Liz Hodgkinson warns that thorough research is needed before buying student housing amid concerns that it is turning some areas into summer ghost towns

If you are considering investing in shared student housing, traditionally one of the more profitable sectors of the buy-to-let market, what do you need to know before taking the plunge?

The main thing is that since 2006 when the rules changed, your student house will probably count as an HMO (House in Multiple Occupation) and need a mandatory licence from the local authority.

Student housing can be a good bet because rents are guaranteed, there is no council tax to worry about and it’s usually easy to repossess the property. Plus, students tend to make reasonably good tenants, even if they do hold parties and neglect the garden.

Don’t get spooked

But the Government is currently taking a long, hard look at the fast-growing student house sector and, in particular, trying to curtail the ‘studentification’ of certain areas of university towns to prevent them becoming ghost towns in the summer months.

Corporate landlord Mike Stimpson, who has four student HMOs in the Brighton area, advises: “Before ever buying into the student market, you should contact the university to establish the level of demand.

“In particular, as the worry about ‘studentification’ takes hold, you need to know conditions for accreditation. In Plymouth, for example, the university will only accredit certain streets, as it wants to prevent student ghettos building up.

“Nowadays, intensive research is necessary before buying into the student market. For instance, major faculties may be moved, thus creating or destroying a previous market. Also, many universities are now starting to build their own student housing on campus.

Avoid nasty surprises

“In some large cities such as Manchester and Leeds, there is now such an oversupply of studios and one-bed flats in new blocks that there is no real scope for the investor in traditional student houses. In other areas, demand may be decreasing as more students opt to live at home.

“Above all, you must contact the local authority to see whether your potential HMO needs a licence and if it needs any washbasins, fire doors or other features to bring it up to the required standard. In most cases, the university will set the rents so you also have to work out whether your investment can wash its face financially, taking everything into account.”

Back to top | Back to contents