Should we buy a property for my student son in his final year of uni

[Deleted User]

We are considering buying a flat/house in Manchester for or with my son when he enters his final year of study. He would pay us rent, along with a house share friend who is employed. My son has a LISA which he would like to use as his deposit (or part of). He intends to remain in Manchester either as a post-grad or in employment. I am retired and my wife is self-employed. Otherwise, he would be looking for a rental/house share next for 26/27. Any thoughts?

ACG

There are various ways to do it, you might want to obtain tax advice as stamp duty, CGT, NI etc will all come in to play as a landlord/second home owner. 

But it could be done in your sons name using his income and rental income. It could be done with you as the owner/landlord or potentially depending on your sons income and the deposit then potentially as a normal purchase. 

silvercar

Only worth doing if he intends to stay in Manchester long term. Otherwise you will have spent loads on buying costs etc and your son will have lost his FTB status, just to sell up without making much on capital growth.

Consider where you would buy.:
(1) Manchester town centre has too many empty flats unlet/ unsold. There won't be much capital growth there and you may struggle to let it if your son decides to leave Manchester and rent it out.
(2) Fallowfield and adjacent student areas are overrun with poor quality student houses, that will either cost a lot to bring to standard or you will struggle to rent out for a decent return. In terms of letting to students, you will have competition from the private halls as well as the uni halls. Also, students have a tendency to want to live in houses of 4-6+ rather than 2 bed flats. 
(3) Nicer areas further south, may be a better bet, but would your son want that journey into uni?

We looked at doing this a few years ago, but the intention was to buy for the start of yr 2, so our son would have 3 years in the property, before we considered the future. In fact, the younger one also intended going to M/C, so we would have had 6 or 7 years in the end, but we couldn't guarantee he would do so when we were considering it.
For all the reasons above, plus students don't make great landlords, we decided not to.

silvercar

If you do want to do this (see my comments above) to avoid higher rate SDLT, you would need to put it in your son's name with a joint borrower (you), sole proprietor mortgage if necessary. That also avoids any CGT on sale, if you did make a profit when eventually sold.

ACG

Commute isnt too bad. I used to get the 42 from Parrs Wood and it would take about 45-50 minutes in rush hour. 

If your looking at Withington/Fallowfield/Burnage etc commute should be less than half an hour. 

webjaved

Nigelcharlesworth said:

We are considering buying a flat/house in Manchester for or with my son when he enters his final year of study. He would pay us rent, along with a house share friend who is employed. My son has a LISA which he would like to use as his deposit (or part of). He intends to remain in Manchester either as a post-grad or in employment. I am retired and my wife is self-employed. Otherwise, he would be looking for a rental/house share next for 26/27. Any thoughts?

What happens if the friend ends up losing his job and doesn't want to stick around long-term? You need to consider the impact that it could have on paying the rent.

silvercar

The problem with a worker sharing with a student is that the worker is liable for all the council tax on their own, with a 25% discount. 

Jemma01

I personally wouldn't do that, esp because your son is still very young and his future plans might change, he might find a (new) gf who has other ideas and influences his decision on where to live.
Far too many variables for him to be fixed in one place. From the time I graduated, I spent 15 yrs renting and moving around the UK, something neither me nor my family anticipated.

You also can't expect a student that's also your son to pay rent, what if he can't? What if his housemate doesn't pay or pays late? Your son is still young, let him figure out his way into the universe without a house binding.

Don't mix your plans with his, if you want to buy-to-let, just do that near you so you can manage it. Don't decide for him what to buy or where to buy, then he blames you for making choices that he later decided he didn't like.