Advice Please, Daughter Off To Uni Buy or Rent?

voucher_fairy

Hello

My daughter if off to uni in September. I'm thinking its such a waste to pay rent for next three + years. Am considering buying / Morgaging a property for her and boyfriend to live in possibly rent out a room to help pay costs . Any one done this? Any advice welcome. Still have 2 years left on my own morgage so would have to re morgage my own house.

Thanks

livin'_next_the_cut

voucher_fairy - i did this... had some spare cash, so was able to borrow around 75% of cost of a small place [this avoided all sorts of expensive indemnity insurances], then rented out 2 rooms to daughter's good uni friends at a competitive rent [as compared to 'halls' and other student houses]. Mortgage secured on the student property, against my income, and no 2nd mortgage on my own house. The rent covered the mortgage payment and allowed daughter to live there 'rent free' [thus reducing my outlay to keep her at uni]. All covered by tenancy agreements and rent paid by parents on bankers order, quarterly in advance. By knowing the tenants, it ensured that the place wasn't abused; after uni, property redecorated [modest outlay] and sold for a healthy profit... which allowed me to give daughter a handsome graduation present - deposit for her own first purchase. Everybody was a winner! BUT... be sure to buy carefully, in the 'right' area [quiet residential, first time buyer type property in reasonable condition... maybe previous occupant elderly... etcetera] so that your outlay is modest and that there isn't any valuation problem. Be sure to go into this with your eyes very wide open. Good luck!

Guy_Montag

It can be a good plan, but it depends on what & where. If I had done it between 1995 & 2000 I might have made a bit, if I'd done it between 2000 & 2005 I would have walked away with bucket loads of cash.

Fastforward to today: I work at a uni, here, a house i rented last year (in a popular studenty area) for £600 pcm is now on the market for £170k. Do the maths:

170k * 0.06 (reasonably mortgage rate) = £850 + expenses (insurances, repairs etc)

versus £600 & no expenses

“You've got to ask yourself one question: 'Do I feel lucky?' Well, do ya punk?”

sciencegeek

i would tend to suggest buying (the amount of rent ive spent over my 7 years at uni makes me feel ill) but...

one thing to consider is it essentially ties down your child to a single location. I greatly enjoyed being able to live somewhere different in the city each year. Also if her friends decide they would rather live in the trendier parts of town your child wont be able to join them. I guess as her boyfriend will be living with her its not such a big deal but its something i would think about myself.

regards

hearts

It also depends on the City she is going to study in. For instance I am in Edinburgh and the market here is still booming so a calculation of costs (rent and buying costs) then estimated increase in prices over 3 years would probably be a good buy here in Edinburgh. Also if you have the money to spare you might decide to hold onto it longer as a pension supplement or a starting deposit for you daughter later.

bionic_banjo

If you go down this route, consider treating daughter and boyfriend as tenants and have them sign up an agreement as a tenants -Just to make sure, in the event of them splitting up or falling out with you, that either of them dont try and claim any equitable occupational rights when you want to sell the property, because then you'd have to 'pay them out' to get vacant possession. You always can have them on a peppercorn rent if this sounds a bit harsh.
However, if you put them on more of a 'market' rent then it will be better for them for inheritance tax if you suddenly die and you want daughter to inherit. Just stuff that came in my head.....

voucher_fairy

Thanks to all so Far. Leeds looks like where they will end up. Any areas to avoid or try for price wise?

Nenen

Maybe I'm just a weeny bit biased because I met my husband at uni (many moons ago) through friends I had made in halls. Our oldest two children are currently at uni (Nottingham and Leicester) and both started their first year in halls making lots of good friends in the process. My eldest is now in 3rd year renting a house with a group and dd is in 2nd year acting as rep in halls (thus getting free accomodation). Both say that they are really glad they spent the first year in halls as it was invaluable for making friends. I happen to think that (especially if your dd is going to uni to be with her boyfriend) that she could miss out on a lot by not having her first year in halls.

You said that you would rent rooms in a house you could buy to her 'good uni friends' ... how will she have made these before she gets there? I think you will find that most 1st year students have already signed up to halls. If there are a few people going from her current school/college then I suppose she could ask them but again I think she would miss out on a lot of opportunities to meet a wider circle.

Having said that... if you could afford the buying option in her second and third year then that might be a good compromise! :beer:

lynzpower

couldnt agree more nenen

silvercar

Bit of an unfair responsiblity on a student to be a landlord to her mates.

wisbech_lad

Chance of her pre-university relationship surviving, not high...