Q&A: A buy-to-let home for your child's degree
My son is going to university - is it a good investment to buy a house and rent it to him and fellow students?
This week's property expert, Ian Balfour, from Coombe Residential in London says:
It is foremost an investment decision and thus one has to look at the current cost of the property against rent received (the yield). If you are able to absorb the, presumably higher, cost of the mortgage against he and his friends paying rent and/or you have a large sum of money that you wish to invest, then why not? It is every parent's wish to make their children's lives as comfortable as possible.
However, as an investment it is not as simple as a plain yes or no - I would wish to know two more things; firstly, which city/town the university is in and what has been the market history (because in South West London the market has seen a 10% rise in the last four months but this is not necessarily reflected elsewhere). Secondly how long do you wish to retain the property for, i.e. do you see this as a long term investment of over ten years? The market has risen for 12 years now and so if you intend to sell it when your son leaves in three years or so, and the market drops, then it would not be the best time to buy. One main tip though, try to buy an investment property near good transport links.
A university town is always going to have a ready list of tenants but students will not pay as highly as corporate tenants or young professionals, thus your yield may be lower. If your kindness towards your son overrides your investment decision then it is truly a gift that will help your son, I just hope that he and his friends look after the property.
