Buying a home for your child at university - Mortgages - News |

News News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Buying a home for your child at university

Buying a home for your child at university

Category: Mortgages

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Your child may be at university, enjoying their first year of student life. But you may already be considering buying a home for them to live in next year. If that sound's like you, you need to make sure you do your homework.

Pros of buying a student home

  • The most obvious benefit is that your child can effectively live rent free
  • With rent forming one of the largest expenses during university it can certainly alleviate some of the financial pressures they face
  • It can ultimately mean that your child will start working life with a much smaller student debt
  • They can also choose who they live with
  • ..and they won't have to deal with unscrupulous landlords.

...and cons

But becoming a landlord doesn't come without its stresses:

  • There are rent collection and payments to consider
  • Relationships with your child and their friends may become stretched.
  • You'll have to think about lull periods in the market, like the summer
  • ...and there is a whole raft of legislation you need to get your head around.

Your student house may need to be licensed under the Houses of Multiple Occupancy agreement, for which you will need to pay your local council a fee and comply with their conditions. These vary from council to council and can be anything from a few hundred to a few thousand pounds.

There is also fire, heath and safety requirements you need to meet

And you will also need to consider the new Tenancy Deposit Scheme rules.

  • Think about the tax implications, because receiving an income from your tenants may mean you are liable for income tax
  • ...and once you come to sell the property there may also be a capital gain, which is again taxable.

But when searching for a buy-to-let mortgage, you need to be aware that not all lenders will lend on student lets. Around 44 lenders currently lend on student property - you will need to place a deposit, typically 20% or more and the mortgage would be processed on the rental potential of the property.

If buying a student property is for you, make sure you take the time to research the local market thoroughly. Speak to some local landlords or the local landlords association, and get up to speed on the best places to invest. Once you've found the property for you, get a feel for the best buy-to-let mortgage rates today.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.