If you have the funds, buying a property for your children to live in while they’re at university can be a good move. Plenty of university towns and cities have enjoyed positive growth in house prices (including London), especially with an ever-growing student population here in the UK. However, there are a few considerations, especially with the current cost of living crisis and inflation.
Here are just some of the things you should think about if you’re considering buying a property for your new student son or daughter, or simply renting a property on their behalf:
A long-term investment
Given the cost of purchasing an investment property – legal and financial fees, survey, stamp duty, possible refurbishment – buying and selling again within a few years doesn’t make much financial sense. It’s therefore sensible to look at buying somewhere as a medium to long-term investment, and somewhere where your children might want to stay post-uni, OR in an area that is desirable when it comes to rentals. The borough of Bromley is generally considered a good bet- being commutable to London and the many universities here is a huge plus, AND we know that people are always looking for properties to rent close to stations and good schools.
This means looking beyond the needs of your immediate family, and make sure you buy something that will appeal to other students and potentially other tenant types.
Check the market
Of course, not every area within every city is performing well, so you’ll obviously need to do some research into local property prices before you buy. If you give Bromley Property Company a call we can advise you as to how the current market is doing in the area.
Rent rooms to friends!
If you buy a larger property, renting rooms to friends of your children should help cover the mortgage payments and give you some monthly profit as well – even once you’ve taken off maintenance costs and allowed for tax. Be aware that if you’re planning to have five or more sharers, the property will be considered an House in Multiple Occupation (HMO) and you’ll need to apply for a licence. Therefore:
- Check the local authority’s House in Multiple Occupation policy. Some won’t allow in certain areas, either because they’re not considered suitable for the neighbourhood or because they feel there are too many in one area. Talk to the housing and planning departments to make sure you understand their regulations and licensing policy.
- Be prepared to invest more money into the property, to make sure it meets all the fire and other health and safety regulations.
If you’re letting to a group of students, even if that includes your own child or children, make sure they all sign an Assured Shorthold Tenancy (AST) and pay a deposit. It’s also highly advisable to make sure their parents sign a guarantor agreement. While everyone might start the year as friends, things can change, and you don’t want to find yourself with a couple of empty rooms and unable to chase rent from people that have left. If you’ve taken out a Buy to Let mortgage, make sure the lender is happy to loan money based on renting to family and have everyone sign a ‘jointly and severally liable’ Assured Shorthold Tenancy is likely to be a condition of the loan.
A smaller investment
If you’re not that worried about the rent covering mortgage payments or making extra income while your children are studying, so you could look into buying a small flat just for them. If you do your research and take professional advice when deciding what to buy, this could also be a good long-term investment.
So what about simply renting?
For many people buying either isn’t an option or doesn’t make good financial sense at the time, so therefore renting is the viable option. Although most students living away from home tend to go into university accommodation for the first year, it mostly works out cheaper to move into a shared house in the Private Rented Sector after that. Thankfully the quality of student houses has improved over recent years! Many landlords – particularly those who have children of their own – offer very modern, safe accommodation with en-suite rooms and facilities such as fast WiFi.