“Bank of mum and dad” should invest in student property

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by Gill Montia

Braemore Property Management is urging parents with offspring seeking a university place to consider buying a property for student children to live in, instead of operating as the “bank of mum and dad” and helping out with rental costs.

The Edinburgh-based letting agent suggest becoming a parent-landlord can be cost effective.

By purchasing student accommodation with a buy-to-let mortgage, parents are likely to see a net long-term gain if the property is sold in the future and the prospect is made even more attractive by indications that the property market is close to bottoming out.

In addition, where student demand for rental accommodation is high, some costs can be covered by sub-letting rooms with the option of re-letting the property once children’s studies are complete.

Braemore director, Colette Murphy, explains that for a four year university course, rental costs can add up to around £18,000.

She adds that despite “forced” landlords flooding the rental market generally, many homeowners who have entered the market because they are unable to sell do not have properties in traditional student areas.

They can also be resistant to paying for the HMO licence essential for the traditional student let.

In related news, buy-to-let mortgage specialist, Paragon, recently reported that mature students, many of whom may have lost their jobs in the credit crisis, are providing a boost to the rental market.

UCAS, the body that processes application for higher education, has recently reported a 12.9% rise in applications from 21 to 24-year-olds.