They’re back: Parents are buying buy-to-lets for student offspring
The once-popular idea of parents buying a property for their offspring to use while at university, and then letting it to other students, appears to be making a comeback.
The trend was popular until heavy duty buy to let regulation and reduced tax breaks came into effect some years ago, along with the emergence of more purpose built student accommodation.
But now, research from online mortgage broker Trussle suggests that as many as 66 per cent of parents are considering purchasing a buy to let property near their child’s university to alleviate living costs during their studies.
The survey was completed by 2,000 homeowners with children and also found that, of those surveyed, 53 per cent of parents would consider downsizing to help support their children through university.
Trussle says that while taxes have been skewed against buy to let in recent years, student BTLs consistently outpace the rest of the private rental market, by as much as 17.86 per cent in rental yield.
For those contemplating a buy-to-let property in a university town, Trussle has also identified the top towns and cities that offer the best rental yields. Using the Times Higher Education guide to calculate the property prices and rental yields in the top 30 universities across the UK (table below).
Miles Robinson, head of mortgages at Trussle, comments: “Buy to lets aren’t the bargain that they once were. Changes to tax and the stamp duty surcharge have impacted returns, which made rental the king of investments, leading to a peak in popularity during 2007.
“However, this new data shows that property is still seen as a safe and reliable way of generating extra income. This can be both in the short term, through rent collection and long term gains in house prices. In addition, the low interest climate means would-be landlords can lock-in a competitive buy to let mortgage, which are typically interest only.”
Trussle has found that there are currently over 10,000 buy to let deals on the market from 71 lenders, with interest rates as low as 1.0 per cent.
|niversity (Rank)||City/town||House Price||Rental Income (pcm)||Rental Income (annual)||Rental Yield|
|Newcastle University (20)||Newcastle||£192,567||£1,508||£18,096||9.40%|
|University of Southampton (16)||Southampton||£235,911||£1,757||£21,084||8.94%|
|Cardiff University (28)||Cardiff||£274,531||£1,748||£20,976||7.64%|
|University of Reading (=29)||Reading||£279,139||£1,744||£20,928||7.50%|
|University of Manchester (8)||Manchester||£246,473||£1,518||£18,216||7.39%|