Finance Choices
Buy-to-let booms in university towns
With student rents rising more than ten per cent in each of the last three years, parents have been advised to invest in buy-to-let property for their academically minded offspring.
As students prepare for their A-Levels and wait for results, their parents should be doing their own homework and investigating property for them to live in at university, according to property investment specialist Assetz.
"University towns have enjoyed big rent increases over the past five years, and with Government incentives to boost student numbers to 50 per cent of all 18 to 30s by 2010, this growth rate looks set to continue. What's more, students now expect to pay rent for a full year, despite the fact that the academic year is only about nine months long," said Stuart Law, managing director of Assetz.
Currently there are 1.3 million students at over 80 universities in the UK, meaning rental demand for student accommodation will remain strong. And ever-increasing student numbers mean rent rises in student towns have handily outstripped the national average.
Assetz points out that this leaves parents two options: watching their children's wallet get stretched further, or reaping the rewards by investing themselves.
By purchasing purpose built student accommodation or converting existing housing stock, parents can not only reduce the burden of debt for their children - predicted to be £17,561 on average in 2006 - but also invest in their own future, enjoying a healthy rental income long after their child has left university, the property firm said.
However, the Young Ones image of slovenly students living in a dive is being proved outdated by the current generation of university-goers.
"Students are becoming more demanding these days, with broadband internet access generally being viewed as essential," Mr Law explained.
"Investors should be sensible about the quality of fixtures and fittings - hard wearing and inexpensive are definitely best and we are definitely seeing evidence of better quality property being treated with more care, perhaps with parental guarantees being more commonly needed nowadays," he added.
And once, like Prince William did this week, children graduate and move off into the wider world - parents are left with a choice, Mr Law commented.
"Purchasers may choose to sell the property for capital gain after their child has departed, or continue to let it. After the pension rules change on A-day in April next year, they will also be able to transfer the property into their pension and collect the rental earnings tax free for their retirement."
As students prepare for their A-Levels and wait for results, their parents should be doing their own homework and investigating property for them to live in at university, according to property investment specialist Assetz.
"University towns have enjoyed big rent increases over the past five years, and with Government incentives to boost student numbers to 50 per cent of all 18 to 30s by 2010, this growth rate looks set to continue. What's more, students now expect to pay rent for a full year, despite the fact that the academic year is only about nine months long," said Stuart Law, managing director of Assetz.
Currently there are 1.3 million students at over 80 universities in the UK, meaning rental demand for student accommodation will remain strong. And ever-increasing student numbers mean rent rises in student towns have handily outstripped the national average.
Assetz points out that this leaves parents two options: watching their children's wallet get stretched further, or reaping the rewards by investing themselves.
By purchasing purpose built student accommodation or converting existing housing stock, parents can not only reduce the burden of debt for their children - predicted to be £17,561 on average in 2006 - but also invest in their own future, enjoying a healthy rental income long after their child has left university, the property firm said.
However, the Young Ones image of slovenly students living in a dive is being proved outdated by the current generation of university-goers.
"Students are becoming more demanding these days, with broadband internet access generally being viewed as essential," Mr Law explained.
"Investors should be sensible about the quality of fixtures and fittings - hard wearing and inexpensive are definitely best and we are definitely seeing evidence of better quality property being treated with more care, perhaps with parental guarantees being more commonly needed nowadays," he added.
And once, like Prince William did this week, children graduate and move off into the wider world - parents are left with a choice, Mr Law commented.
"Purchasers may choose to sell the property for capital gain after their child has departed, or continue to let it. After the pension rules change on A-day in April next year, they will also be able to transfer the property into their pension and collect the rental earnings tax free for their retirement."
posted by Bruce Wayne at 7:48 AM
Buy-to-let booms in university towns
7 Comments:
This is all very well if you're rich enough to buy an extra property for your children to stay in whilst at university but for most of us it's a struggle enough to send them in the first place!
You have a fair point anonymous but with the correct management it can prove a very good investment and pay for itself many times over as well as providing affordable housing for your children whilst at university.
The only big risk is for the parents Especially if you kid is a partier MY parents bought a home for my brother and rented it out to his friends and my brother to cover costs (my bro was rent free) Needless to say after a year the house was in terrible shape and my parents were PISSED!!! so needless to say when i went to college I asked them to do the same for me and of course they didn't....
I know people that have done that and made out well. They actually made money on the college housing after four years.
They had girls though that took good care of the places and didn't trash them like some guys do.
This happens in the US too. University towns are often pricier then others. There is always a demand, thus justifying the higher prices. I wish my parents had thought of buying me a place - they could have paid off all my debt by the time I had graduated by the price increase. Hindsight is 20/20 I guess.
Help!
I'm hoping someone can help us!!
My husband and I are looking into buying a house but we first don't have a deposit so we will need a 100% mortgage and second we are moving back to South Africa in 8 months time, we want to keep the house as an investment so we would like to rent it out, will the motgage lenders penalies us for taking out a 100% mortgage because we will change to a Buy to Let mortgage?
Anyone got any advice for us??
Regards
Acoustic
You wont be able to simply switch to a buy to let, as these require around 15% deposit, which you don't havr and I'm hoping house prices wont rise that much in 8 months. Is your move to SA permanent? Some lenders will let you rent out, usually for a set period like 2 years, for an extra 1% on your current rate, but this is at their choosing and they would be more likely to agree to this if you had put something into the house, so if you can stretch to a 5% deposit then all the better, as you'd also get a better initial rate aswell.
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