According to the 'Student Space' survey, 38 per cent of those polled also say it makes sound financial sense to purchase an additional home for student rental, rather than shelling out thousands of pounds on rent over three or four years. With enthusiasm at a high level approaching the new academic year, Inside Track has advised caution when making the move.
The Inside Track Group believes there is money to be made in the university accommodation market, but says parents need to understand fully what they are getting into. Although a quarter (26 per cent) of those asked said snapping up ‘student digs’ would be a good future investment, Inside Track chief operating officer Anthony McKay comments on the long-term implications of making a purchase:
“The average university course lasts three years,” he said. “After this time, or possibly before if your child drops out, you could suddenly find yourself becoming a professional landlord.”
McKay advises parents to seek professional guidance to ensure they understand all the complicated aspects of the market.
“Sometimes people forget about the tax issues when buying student houses – owners will be liable to capital gains tax, as well as income tax on rent monies. Then there are costs for building insurance, furniture, repairs and letting agent fees that often get overlooked when decisions are made.”
The ‘Student Space’ study showed 36 per cent of parents view purchasing a student house as giving their child a handy ‘leg up’ on the property ladder. With this, McKay said, parents have the option to go for either a buy-to-let mortgage, or opt for a first-time buyer deal that can be put in the child’s name.
“Buyers would be moving into a buoyant market,” he continued. “Prices of rental property have been increasing rapidly in many big student towns. In Durham, for instance, values are up 122 per cent on five years ago, and Birmingham (98 per cent) and Edinburgh (97 per cent) have seen similar rises. We would just encourage everyone to educate themselves in the same way that they would if they were planning on becoming a professional buy-to-let investor.”
Inside Track also advises buyers to look at the city infrastructure carefully. University towns with high student populations, good graduate retention levels and top-performing universities are factors that should come into the equation.
McKay concluded: “With the right planning, education and property selection, purchasing student accommodation can be a good long-term money-earner for both parents and their children. Buyers still need to study the market carefully, though, and seek professional advice to ensure they pay the right price for a sound investment property in the resale market.”
