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Parents warned over buy-to-lets

Parents are being warned to do their homework before investing in buy-to-let properties for children going to university.

Around 83,000 of Britain’s 2.6 million second properties are bought by parents for their student children.

Lee Tillcock, editor of Business Moneyfacts, says: “The latest Business Moneyfacts survey confirms that almost 40 lenders would consider student lets, so there is certainly choice in the market, but encroaching legislation and other purchasing options need to be considered before a parent enters the fray.”

Tillcock says the flexible criteria for houses of multiple occupancy is something parents should be aware of.

He adds: “The grace period for HMO licensing has expired, so any new qualifying property purchaser will need to comply or face fines of up to 20,000. But as licence fees, criteria and type vary from council to council, assessing the additional costs can be an almost impossible task.

“The standard HMO criteria are a three-storey property with five or more tenants from two or more families sharing facilities. But as individual councils can choose the criteria or implement selective or discretionary licences, it is essential that parents do some homework first. Recent figures indicate fees range from 100 to 2,000.”

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