Should I buy flat for student niece to live in?

Marvinsmum

Hello, I am new to this so forgive me if there is already a thread there, but I couldnt find it!

I have inherited £110k and i am paying £200 per month for the next 5 years towards rent whilst my niece trains as a doctor in Glasgow. I will need to invest this money and at the moment the £200 is lost each month so I was thinking of buying a 2 bed flat, let her live there rent free and get someon in the 2nd bedroom, split rent so that it covers her bills and the mtce.

My concern is, will this work in practice and at the end of the 5 years am I going to be able to get anything back on my investment, other than the satisfaction of helping her?

Anyone doen this before?

Jowo_2

I think you need to do some maths to see if your investment will yield a return and work out cheaper than paying her rent money.

How much are 2 bed flats in the area where your niece needs to live and how much would mortgage costs be?

What are the market rents for lodgers in that area (a fellow student means council tax exemption but a working one means a less generous discount)?

What are the likely cost of the bills plus the mortgage on the property which you hope the lodger can cover? Would there be any shortfall and who would pay it?

What are the likely start up costs (legal/buying fees, furnishing, stamp duty) and any sales costs if you decide to sell after your niece graduates?

What would you estimate the repair costs and void periods could be?

Have a look at Capital Gains tax exposure which kicks in after 3 years I believe to see what potential expense is there. What is the likely CGT bill after 5 years?

longtimelurker_2

Medical students often get farmed out to the middle of nowhere after the first 2 or 3 years - this happens all over England and is even more actuely felt in Scotland as the distances can be so great. This has happened to all the medical students (now doctors) that I know.

This might happen with your niece which means she would need to be flexible with her accommodation, so maybe consider whether buying somewhere be the best solution for her?