“Our son is off to university. Should we invest in a house for him?”

As students prepare to return to university, or embark on their freshers’ year, the reality of funding studies and living costs rises to the surface. University is expensive; there’s no getting away from that. But some families will be in a position to mitigate costs by investing in a student house.

There are some significant advantages to owning the property in which your student child will live. Firstly, the security of them having a guaranteed home in an area you’ve chosen, with a reasonable landlord. Secondly, the income earned from renting rooms in the house. And then the investment potential: either holding onto the property beyond your child’s university days and letting it or selling (hopefully) at a profit.  

But being a landlord comes with strict responsibilities and inevitably some financial risk. Parents may not be prepared to take this on, even where their financial situation would allow it. So, understanding the nature and extent of a landlord’s obligations is crucial in weighing up the decision about whether to buy, and it’s essential that you get specific advice on your position and your options. (Some families may instead decide to put the money towards minimising their child’s overall university debt, for example.)

Among the important considerations is tax - Stamp Duty, income tax on rent, and the possibility of Capital Gains Tax applying on a transfer of ownership, for example.  Inheritance tax could also be a consideration if you decide to fund your child’s deposit on a house, enabling them, rather than you, to own the property. This can of course be a helpful way of getting a young person onto the housing ladder, as well as delivering the benefits of home ownership during their student days – if they are prepared to shoulder the responsibilities.

The form and structure of your arrangement needs careful consideration (might you choose to own the property jointly, for example?) and legal and financial advice is key to getting the right strategy in place.

Our team is here to help. Contact us to discuss your situation on 01264 353411 or email us at info@bsandi.co.uk.