Wednesday, Apr 29, 2009
More comedy (this time North of the Border)
FT: Student property flagged as sound investment
Investing in student property remains a "sound" investment despite the current environment of falling house prices and rental income. According to one of Scotland’s letting agents, parents with children set to attend university could save thousands of pounds in rent payments and provide themselves with an investment opportunity by purchasing a property for their children during their studies. Braemore Property Management, says many students rely on their parents to help cover their rent payments, but it suggests that it can be more cost effective for parents to purchase a property for their children to live in.
Posted by jack c @ 04:12 PM (722 views) Add Comment
11 Comments
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1. general congreve said...
I shared a house with 4 other guys at University, we ony paid about 30 quid each a week. Admittedly that was over 12 years ago, but all the same, I can't see how it'd be cheaper to buy a house for your kid. Even if you think your kid is special and deserves their own property while at University or you intend to become a student slum landlord yourself by renting the other rooms to your kid's mates, continuing house price falls make it a total non-starter. Complete ramping hogwash.
2. techieman said...
...gc not only that but you have to jump through a few hoops re HMOs if ive not misunderstood..
3. jack c said...
By their own addmission we currently have an environment of falling house prices and rental income. Couple this with (as techie points out ) the potential complication of Houses in Multiple Occupation (HMO) Licensing - getting a BTL mortgage with HMO requirement is not easy then add in purchase/legal/letting costs etc... for me makes this an absolute non starter.
4. icarus said...
What's a 'student property'? In which ways are such properties so different that they can be regarded as a special segment of the market?
5. jack c said...
@icarus - normally a property in an area which is in relatively close proximity to a University or College - an example would be Durham or say the Jesmond/Heaton area's of Newcastle upon Tyne where there are many established landlords who effectively have a ready supply of tennants year upon year.
6. icarus said...
@ jack c - thanks. I guess my question had a rhetorical edge - as in 'what's so different about student properties that they can (a) defy the property market drift downwards and (b) cannot be substituted by other kinds of properties slightly further away from the univ area?
7. Tiberius Leodis said...
Living in a city (Leeds) that has anything but a "traditional shortage of student properties", I find this article particularly amusing.
They have neglected to factor in how the recession will affect the number of parents who can afford to put their child through university, nor have they mentioned an almost certain rise in student fees in the near future (though Scottish fees do work differently).
Edinburgh may be an exceptional case, I'd be suprised if there weren't even more empty properties in Leeds by the end of the year (17,500 at last count).
http://tiberiusleodis.wordpress.com/
8. Muswell Hillbilly said...
If a property is owned by the parents of a student, and it has (I think) no more than two other occupants, it is exempt from HMO licensing rules. However, what do the parents do when wee Tarquin or Fiona has finished university and possibly moves away for work or further study? It might have looked like a good idea to buy a flat a few years ago, when after three or four years it could be sold for a fat profit, but now the parents will be lumbered with a flat which is worth less than they paid, which they can either sell or try to let in a saturated rental market.
9. inflation is eating my savings said...
Nothing whatsoever to do with widespread Scottish Uni reconstruction programmes that remain unfilled, I promise.
10. Karma4all said...
The students that shared with me left without paying the last couple of months rent. They are not the most cash rich bunch & entertainment is often a priority. Your generally talking about a property that nobody loves, I'm not sure I'd want to get involved but it is a market that needs catering for.
11. Wyldman said...
"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 and over a four year period, this can add up to around £18,000 in rent"
Don't know of any flats you can buy in Edinburgh for £375 a month where a student wants to live - i.e. Marchmont, Bruntsfield, etc... So you might have to subsidise an extra £300-£500 every month to make up the rest of the mortgage. Then after the four years maybe the student will leave Edinburgh and the property will be down in value 20%-30% and you make even more of a loss. You can rent shared student accommodation in Marchmont/Bruntsfield for £250 or less if you look around, better doing that I would say.