Letting while you learn

Parent-landlords can profit from student digs

Even in these straitened times buy-to-let properties in university cities can make sense. It’s wise if you’re a parent looking to buy somewhere that your offspring can stay in and share with friends to look around carefully before flashing a cheque book.

The most sensible thing is to rent first – and to use your rented property as a base from which to survey the buying market.

Get to know the area and its ease of access to the university. If there’s not good public transport links you’ll have to buy a car for your sprog as well as somewhere to live.

Try and imagine that in three or four years when your child’s degree is finished you might want to sell. Is the property sufficiently attractive to draw putative buyers? Properties which are good student-lets aren’t always what residential buyers want.

On the other hand, many parent-landlords hang on to the properties – seeing them as good long-term investments.

Try and find out if the university is growing – many are. This will increase your letting potential. Buy to let mortgages are thin on the ground. Make sure you can get one at a rate which you can cover with the letting income.

Your offspring will no doubt pick who they wish to share with.

But using a light touch – you don’t want any rows - try and gently run the rule over them yourself. Discreet vetting might not go down well with your offspring. But you don’t want a bunch of lunatics who are going to completely wreck the place.

Don’t forget that by law you must now keep the deposits that your tenants give you in one of the government approved schemes. This was brought in because too many landlords were doing a runner with the deposit monies.

For a diversity of reasons it can be sensible to put the property in your offsprings name. Check with your accountant/solicitor/broker/ Citizens Advice Bureau. Don’t forget that estate agents are also a mine of information. They don’t all speak with fork-tongues.

Make it clear to your heir that they are on the on- the- spot- landlord. You expect them to be responsible and to make sure that the chosen sharers are coughing up their dues. Don’t do it on handshake or some vague tacit agreement. In the longer term you’ll find it’s wise and advisable to lay down the ground rules, in writing, at the outset.

Give the sharers – no matter how well you know them – a tenancy agreement and have the rent paid by direct debit and the bills divided equally between all tenants. It is crucial that all this should be written down. Friendships can soon vaporise where money is involved.

If boyfriends and girlfriends start moving in – it can and almost certainly will happen – then try and build in some provision at the outset to ensure that they too pay their share of the bills if you want to avoid a mini world war breaking out among the other tenants.

There are also legal rules about multiple occupation. If there are more than half a dozen tenants in a property you have to get council permission.

Every property in the land has been hit by the Great Crash. But it’s intriguing how many university towns have remained relatively buoyant.

Having said that, Cambridge has taken a biggish hit in the latest figures. But there are special circumstances.

Out of all university towns Cambridge property price escalation was largely because of the Silicon Fen phenomena, a cluster of high-tech industries whose bosses earned sky-high salaries and whose presence sent property prices rocketing. So any fall will appear higher and disproportionate to that seen in other university towns.

Property price growth in the last five years in such places as Durham (59%) Birmingham (34%) Sheffield (48%) has been remarkable, though of course those figures will have been lessened now.

And it’s not just the old established university towns. Polytechs and their ilk have been turned into universities from one end of Britain to the other and in some of the lesser known new university towns you may be able to pick up a bargain.

A final word. Try and make sure that the university which your child is attending hasn’t got some grand plan up its sleeve to build all their own accommodation. Most students stay ‘in halls’ for their first year. But if a university is planning to house all their students for the entire duration of their degrees it could prove catastrophic for a parent- landlord.