Should I buy a property for my Son in Uni? 4 February 2020 at 2:24PM in Student MoneySaving 11 replies 507 views

hamster99

My Son is looking to rent a house with 2 friends at the moment as he has to move out of halls this summer but competition for properties is fierce and he has lost out on at least 4 houses in the past few weeks.

For what he will have to pay to rent a student house (£1,650/mth) it's now occurred to me that a mortgage wouldn't cost that much so should I buy a house for him to live in and he rents 2 rooms to his friends.

Not sure of how it would all work but we could afford a 20% deposit and our current mortgage is very small and my wife and I are both working with a decent joint income.

Has anyone else done this? Other thoughts?

Cheers

Rob

Owain_Moneysaver

It can make sense to do this but you will be paying more for a buy-to-let mortgage. You will also have to make sure the property is suitable for letting, as regulations are being tightened up and depending on where it is you may need a HMO licence, fire alarms, etc.

If he/his friends don't pay the rent, are you happy to evict them? Will he/his friends be willing and able to pay rent for the vacation periods? Will they be moving back into halls in subsequent years and will you be wanting to keep the property on as a buy-to-let? The fixed costs of buying/selling probably mean it isn't worth while doing this for just one year.

Loanranger21

Capital gains tax!
He could always get a part time job to help fund his lifestyle and would give him very useful stuff to put on his CV. Also he would have less time to spend money. Maybe he already has a part time job... apologies if so.

Owain_Moneysaver

Loanranger21 wrote: »

Capital gains tax!

Only if it sells at a profit Which it might not after students have been in it for a year or two.

Income tax on the rent too, though. Only limited deductions allowed for expenses.

grumiofoundation

Assuming you can get a mortgage (renting to family member, not that high a deposit so probably not straightforward) as said above are you prepared for the hassle and costs of becoming a landlord?

silvercar

For what he will have to pay to rent a student house (£1,650/mth)

Seriously???? What part of the country is this? My son was paying £450 a month only a few years ago.

Durban

He could do it with a student mortgage , specifically for this purpose.

One of mine went to uni in Reading a few years ago and we were humming and haarring about the same thing. Turns out we didn't because of the hassle.

Prices then rocketed because of Crossrail. If my daughter had done this with a student mortgage , she would be well set up now. Times are different now and not much capital growth to be had and a lot of hassle and a lot of regulation

piggy_bank

silvercar wrote: »

Seriously???? What part of the country is this? My son was paying £450 a month only a few years ago.

This! Even in London it's perfectly possible to find places for half what you're suggesting it will be. Perhaps he's just set his sights on very fancy accommodation? Unless that £1650 / month is for the entire 3 bed flat, and not per room?

Durban

piggy_bank wrote: »

This! Even in London it's perfectly possible to find places for half what you're suggesting it will be. Perhaps he's just set his sights on very fancy accommodation? Unless that £1650 / month is for the entire 3 bed flat, and not per room?

I think what the OP is saying is that it is £1650 for the whole house , ie £550 each which is realistic

eggandchips7

Off topic but I wish you were my Dad lol

silvercar

Students don't make the best landlords and you will find it harder to find tradesmen in  a town that isn't your own. No easy way to get recommendations etc
If you are set on this then take advice whether it is best to structure as your son owning the property with you as guarantors, you owning the property as a second home or some combination.