Buy to let for my (student) son

nibs

Hi, my ds is going off to uni in sept and is looking to rent for about £500 a month.
Im now thinking about the possibility of buying a little flat for him to rent off me and then sell when he's finished, if he wants to move on.
Would i have to get a buy to let mortgage?
Has anyone done this and regretted it for whatever reason?
Thanks...

luckyfool

Would be be paying the rent from his own resources, or would be be paying the £500 per month rent from effectively support from yourself?

A traditional Buy to Let mortgage should be available up to 70-75%, but your issue will be that it would be a regulated BTL as he is your son. This would exclude the majority of BTL lenders, and in a relatively uncompetitive market your rate would potentially be a bit higher.

If you are solvent and have the affordability, then there are lenders that would allow you to buy the property as a 2nd residential mortgage for a dependent to live in. You would need to be able to afford both it and any other residential mortgages from your salary, and they would need to be satisfied that you were not going to rent the property out (hence why I ask if you would be supporting your son). As far as the lender is concerned, if your son was paying you £500 a month in rent then that would rule this option out.

nibs

Thanks for replying, I was thinking of buying a small flat and could just afford a small mortgage on mine and DH salary. Yes we would be supporting my son through uni and paying for his accomodation.
We do have £230,000 equity in our house so wondered if we could borrow with our present mortgage lender or whether its still better to shop around?
One house I looked at was a shared ownership but I dont know much about these atm. I need to do a lot more research.

PasturesNew

You won't qualify for a Shared Ownership. These are for people to buy and live in, people who could never afford to get a home of their own by other means on the open market. Your aim is commercial/gain/minimising costs.

- What if you/OH lose your jobs?
- What if sonny boy drops out?

nibs

Oh right, thanks Pasturesnew, like i said, I havent looked into it much atm (wont bother now!)
If DH lost his job we would sell up anyway as we hate where we live.
If DS dropped out it would be a problem as far as the flat is concerned so thats something we have to really consider.
Just begrudge paying £500 a month to a stranger without considering other options as well

Annisele

Are you sure that your son will want to live in a small flat on his own? It depends on the university he's going to, but I think that I would have missed out on a lot if I hadn't lived in halls/shared housing for three years.

If you buy a larger flat, then he gets both the advantages and disadvantages of sharing with others - but he also gets the hassle of being (in effect) a resident landlord.

One other possible pitfall is that, unless your son has an unconditional offer, you can't be absolutely certain which university he'll be going to in September until results come out in August - and a month is a pretty short period to find a flat. Depending on how sure he is that he'll get the grades he wants, he might think of your househunting as an unwelcome pressure. (OTOH he might be pleased by the confidence you're showing in him - or he might have an unconditional offer to start with).

£500 goes a lot further in Preston than in London - what area of the country is he going to be moving to? Has he decided against the university's halls / was declined a place?

nibs

He's moving north where a flat is quite cheap and he has a long term gf who will be living with him (she lives with us atm)
He will defo be going to this uni and we have a relative who lives there so he could stop with them short term.
They are good points though thanks. Its definately giving me more things to think about.

luckyfool

You could remortgage your property to fund the deposit, or to be able to buy the new property for cash should you want.

poet123

We considered this with our 3 older sons. We originally thought it would be a good idea when number 1 son went, and that if we could persuade the others to go to the same uni it would be a long term investment.:D

However, number one son changed courses after 18 months and had to come home for 6 months before he could restart:(, sons 2 and 3 chose entirely different places to study based on their own personal views of the best place for their ( same!!) subject.:D

So, the plan never did come together,:rotfl: however, from my research I learned that it is better to consider this after the first year when they have made some friends, but then they become the landlord in residence and the friend, so sometimes hard to keep the business footing that is needed with late payers etc. Also, when visiting as a parent you need to be realistic about the state the place (your place) will be in, not always easy. Also, it is a long term investment and one which will still be ongoing when your son finishes uni, what then? do you sell up after 3 years and lose money or become a landlord to hordes of other students with the attendant maintenance problems?

£5OO PCM seems a lot of rent to me, unless he doesnt intend to share , my latest rental payment was £70 pw (just made the last payment for son number 3 as he graduates in July:T) but that is at a Uni in the north, so maybe that is the rate in the south?

nibs

luckyfool wrote: »

You could remortgage your property to fund the deposit, or to be able to buy the new property for cash should you want.

Thanks, if i remorgage, would i get to keep the same rate as now ( 0.5 above base rate!) or would I have to take a new rate?

FraudBuster

When I looked into this for my kids it was not a viable option as mortgage interest rates were sky high.

I think that this is a very valid point:

but I think that I would have missed out on a lot if I hadn't lived in halls/shared housing for three years.

P.S. Check out the current interest rates in Greece.