Parents are on the prowl again for a buy to let home for their student children to try to keep university costs down.
For mums and dads looking for university city student housing, here are some top tips.
Set your budget – Paying over the odds for student housing that won’t pay back a good return over the years is not a good investment.
Location, location, location – Take a leaf out of the professional student housing letting book. Big corporates do not buy expensive land and buildings near campus – they opt for transport hubs. The catchment area is wider and if the city has more than one university, the market for tenants is broader
Parking is paramount – One of the biggest complaints about students after noise and rubbish is parking. It’s a good idea to pay a premium for onsite parking if you can get it
Exit strategy – You will want to sell some day, and not many families or couples want to live in student neighbourhoods. Try and look ahead and buy in a nice area rather than go for a student street that will bring the price down
Know the law – House sharing often means needing a house in multiple occupation (HMO) licence. Some councils apply licensing to all buy to lets, some to those with three to five sharers and all will licence homes for more than five tenants. Licensing, landlord accreditation and fire safety rules will all add to the cost of the property
View in term time – If you can, view in term time and definitely visit the street at night to check up on the neighbourhood and parking. The chances are everyone is out during the day and the area changes character at night.
Don’t buy near pubs and takeaways – Late night noise and rubbish are the drawbacks
Consider tax – Think about capital gains tax on the sale – only owners living in the property get principle private residence relief that reduces the bill. Rent-a-room relief is also available to renters as well as owners and that gives a tax-free income of £4,250 a year that can go towards the mortgage.
If you set up joint ownership with a student son or daughter from the start, it could pay big dividends when you come to sell.