Buy to let for student daughter

Rococco

Has anyone any hints and tips for me? I'm considering buying a property for my daughter who starts uni this year. Is the best route a student buy-to-let (with buy-to let mortgage)? Or how do I stand if I buy her a property to share with one friend? Would that still be a student let, or could the friend be a lodger?
The property would be in Cheltenham. I am a house owner with a paid-off mortgage.

anselld

Just doing that myself.
Book "Landlords Guide to Student Letting" by Catherine Bancroft-Rimmer is a useful start.

If you put the house in her name she can use the "rent a room" scheme and her personal allowance to avoid tax on most of the rental income.

The alternative is for her and the lodger both to pay you market rent and then claim back mortgage expense against the tax (you cant do that with rent-a-room).

You need to do the sums and decide which is best. There are also CGT implications.

My own view was to own the property myself (actually 99% my wife, 1% me as I am high rate tax payer) and charge market rent to daughter and other tenants. ie a fully commercial arangement. Main reason for me was that there is enough responsibilities for students to get to grips with without becoming a home owner.

I was also in the same position as you (paid off mortgage). I remortgaged my own home to raise the money then bought in cash. Two advantages of this
(a) Cash buyer with funds available is a massive negotiating point
(b) Much cheaper than btl mortgage.

I mortgaged with First Direct (very highly recommended I have to say) as an offset mortgage so even whilst I had the money drawn down I do not start paying interest till completion on the new purchase.

socrates

anselld wrote: »

Just doing that myself.
Book "Landlords Guide to Student Letting" by Catherine Bancroft-Rimmer is a useful start.

If you put the house in her name she can use the "rent a room" scheme and her personal allowance to avoid tax on most of the rental income.

The alternative is for her and the lodger both to pay you market rent and then claim back mortgage expense against the tax (you cant do that with rent-a-room).

You need to do the sums and decide which is best. There are also CGT implications.

My own view was to own the property myself (actually 99% my wife, 1% me as I am high rate tax payer) and charge market rent to daughter and other tenants. ie a fully commercial arangement. Main reason for me was that there is enough responsibilities for students to get to grips with without becoming a home owner.

I was also in the same position as you (paid off mortgage). I remortgaged my own home to raise the money then bought in cash. Two advantages of this
(a) Cash buyer with funds available is a massive negotiating point
(b) Much cheaper than btl mortgage.

I mortgaged with First Direct (very highly recommended I have to say) as an offset mortgage so even whilst I had the money drawn down I do not start paying interest till completion on the new purchase.

Very sound advice!

Mini_Bear

Would it be best for your daughter to settle into university and for the first year to live in university halls of residence in order for her to make friends etc. A lot of problems in my experience of students dropping out is that they did not live on campus in the first year and therefore didnt have the same level of social interation with other students.
During her first year your daughter could do some digging around asking about student accomodation, what students pay and the best areas. You can then see whether buying will be a useful investment for her second and third year. after she graduates you could then continue to rent the property.
My university ( Durham) had an accredited landlord scheme where the uni would check potential student properties and then score them. If they came up to scratch the university will market them to the students. It may well be worth waiting for your daughter to get a feel for the uni before you make a large investment decision.

anselld

Very good point and the book I mentioned also recommends this too, especially if you are not familiar with the area.
That is actually what I did. Unfortunately halls were full up and daughter ended up in slum housing with a cr*p landlord for a year. You cant win!!
Having said that if I had bought a year previous I would have lost a shed load of market value. Might still do, who knows. :-)

clutton_2

in recent years many universities have been building their own student accommodation, and there are some towns where landlords are really struggling to get tenants - this means rents will fall.

buying a BTL is a long term committment - are you prepared for that ?

you are not just buying a house for your daughter for a couple of years, you are starting a business - may i suggest you do a great deal of reading before embarking on this.

the Houses in Multiple Occupation regulations (part of the Housing Act 2004) can be quite onerous for student landlords if you buy the wrong sort of property


https://www.singingpig.co.uk
https://www.landlordzone.co.uk

all have excellent advice re letting

silvercar

Do research the area well.

I looked at buying a flat in Mancheser city centre. Problem is students only want shared houses, only want to live in student areas and the place is overrun with people like Unite having blocks of private student flats.

Student lets really are hardwork. They now demand things like broadband and flat screens and gardeners; redecorating annually and a LL or LA on hand.

Big downside is that if you don't get your property let for September it could be empty all year.

My son has already signed up for next years accommodation, the best and cheapest go first. He couldn't wait to see if I was going to buy or the desirable stuff would have gone.