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Cashing in on the buy-for-uni boom

My son is fast approaching his 18th birthday (I know – I don’t look old enough) and while a big party might be on the family planner I’m also considering how to help fund his university years.

Looking at the latest house price statistics it appears that many university towns have seen significant price rises partly as a result of parents buying properties for their student offspring.

According to reports, this phenomenon is growing at a record rate. A survey of the UK’s 2.6 million second properties indicates that 83,000 of them were bought by parents for their children while they were at university.

This has not only pushed up local house prices but also rental yields. Looking at the cost of rent versus the cost of a buy-to-let mortgage, buying is an attractive option.

This trend looks likely to continue as more people opt for further education. The student population has exploded from 400,000 in 1963 to two million today. Demand looks strong but supply is also improving. These days students expect more than a damp flat with few modern conveniences. They expect to have a dishwasher, a tumble dryer and broadband access.

Of course, purchasing a buy-to-let property should not be entered into lightly. What will I do when my son finishes university – sell it or continue to rent it out? Will the property be a house in multiple occupation and require a licence? Will I be liable for Income Tax and Capital Gains Tax?

Like any property transaction it takes careful consideration of all of the facts to avoid a nasty experience, and this is where a good mortgage broker or IFA is essential.

I can’t walk into a high street branch of my local bank or building society because the adviser there won’t have a clue about buy-to-let. But I would expect my mortgage adviser to know the answers to all the questions I have.

This is a great sector for IFAs and mortgage brokers. It’s a captive market – where else can I get advice on the subject? And don’t think this issue is localised around universities – the properties might be but the prospective buyers are spread nationwide.

Before I get calls from loads of IFAs or brokers offering their services, I’m afraid I am already committed to my excellent broker, Ian Morley of Yorkshire Financial Services.

Alan Cleary is managing director at Edeus


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