Parents Profit from Property Bargains - 23/06/11
Savvy parents, in the position to buy, are turning to the auction rooms to invest in property for their student offspring, say industry experts.
With fees tripling to £9,000 per year in 2012, university applications have soared this year, leading to an increase in demand for student properties. As a knock-on effect, so-called 'bank of mum and dad' landlords are snapping up properties now to let to their offspring.
Universities and Colleges Admissions Service (UCAS) reported a rise of 12,914 applications compared to the previous year with students wanting to secure places for 2011 before the fee changes take place.
Scott Hendry, expert at national lender Auction Finance Limited, has seen an increase in parents purchasing properties for their children.
He said:
"There are great opportunities at auction for those looking to invest in the student buy-to-let market, with rents on the rise and demand on the increase there are high yields available. Universities are at, or near, full capacity and good accommodation is sought after.
"Investing is definitely a growing trend amongst parents. Student property is a sound investment for the future and there are bargains to be had. We'd seen a lull in this type of purchase in the auction rooms; parents were put off by lending difficulties, red tape and a troubled property market but things are starting to change.
"Right now we're seeing more student property purchase on our books again and I see it as a sector that is going to perform well this year. For anyone in the position to buy, it's a smart move - you're saving cash on rent and investing for the future. It's a money-maker - through both equity and rental income. Rent is virtually guaranteed for two years for the duration of studies."
Oliver Adams, Director of Auction House Lancashire, said:
"We have always seen parents looking to invest in university towns throughout Lancashire, as it's a win-win situation. Parents get a sound investment property with immediate income, along with the security of knowing their child is safe. In the last 3-6 months at Auction House Lancashire, we've noticed a greater number of parents securing student property at auction.
"Bidders know that university towns have a good letting market, so even after the children have finished their studies, parents are still going to have a market for their house. Finding a property with extra bedrooms is also important as it allows the student to share with a number of friends as well as generate income."
Auction Finance Limited offers five key tips for parents looking to invest:
- 1. Location is key. The property needs to be near shops, nightlife and within walking distance from main college buildings.
- 2. Remember a three bedroom house can easily become a four bedroom by converting one of the rooms on the ground floor.
- 3. Accommodation for five or more students will need a Houses in Multiple Occupation (HMO) license.
- 4. Avoid properties with gardens - they need maintaining.
- 5. Decide between old and new. Old will be cheaper but will require upgrading. Remember - students like space so Victorian terrace homes with their generous room sizes make a good investment.
