Parents with children set to attend university could save tens of thousands of pounds in rent payments and provide themselves with an excellent investment opportunity by purchasing a property for their offspring to live in during their studies, according to one of Scotland’s leading letting agents.
Braemore Property Management has highlighted that, as many students rely on the “bank of mum and dad” to help cover their rent payments, it can be more cost effective for parents to purchase a property for their children to live in.
The firm has highlighted that, by purchasing a student flat on a buy-to-let mortgage, parents are likely see a net long-term gain on the property, as they will be able to sell it for an eventual profit in the future.
The company believes that, as there is a traditional shortage of student accommodation in Edinburgh and tens of thousands of students desperate to secure a good property to live in every year, parents can also take advantage of this demand by sub-letting rooms in the property to their children’s friends – or by re-letting the property to other groups students once their children complete their studies.
Colette Murphy, director at Braemore Property Management, said: “Many parents spend a lot of money to help their children rent a property when they are studying at university. Over a four year course, this can add up to around £18,000 in rent, so it is a big expense.
“In Edinburgh, there is a traditional shortage of student properties and there is always a big rush when these flats are put up for let. Some students will start enquiring up to nine months before the beginning of the academic term in order to secure a good property.
“Even with the recent increase in supply of rented accommodation in the city – which has been caused by ‘reluctant’ landlords putting homes up for let after failing to sell them – there is still a shortage of student flats. Many of these new landlords have properties that are not in the traditional student areas of Edinburgh and most are unwilling to pay extra for an HMO licence, so there is a limited amount of good student properties available in the city.
“Buying a property can therefore be a smart move for parents. Instead of paying money for their children’s rent, they can own an asset and are able to sub-let rooms in the property out to other students during term-time to help cover mortgage repayments.
“There have been reports that the housing market may start to rise again in the future, so it’s currently an affordable time to buy a property if you have the funds in place for a deposit. Buy-to-let mortgages are also available, so it can be a good investment that will pay dividends in the long run.”
Braemore Property Management, based in Dundas Street, is one of Edinburgh’s leading letting agents and boasts a portfolio of 850 properties in the Capital worth more than £250 million.
Colette adds that parents can also reap the reward on their property after their children have left university.
She added: “If you don’t want to sell the property at the end of the four year course, there’s also the potential to re-let your property to other groups of students. If it’s a three-bed or larger flat, you will have to pay for an HMO licence but this is a small outlay compared to the potential rent gain you will get in the long run.
“In Edinburgh, there are more than 50,000 students, so there is a steady demand every year for good student accommodation. Those in their second or third year are generally reliable, responsible, sign up to 12 month tenancies and have UK-based guarantors. Student tenants are also prepared to pay a good rent level for the right place.
“Even if you have a smaller property in the right area, there is still potential to rent it to the student market, as the current economic climate has led more people to return to higher education in order to improve their qualifications. Many of these mature students are looking for flats to rent and, like undergraduates, they are happy to pay a good price for a good property.”
“We have already let a considerable number of properties for the next academic year and while rent levels on many properties let so far this year have gone down, student rent levels appear to be holding value.”