Investing in your child’s future: how do I become a student landlord?

Investing in your child’s future: how do I become a student landlord?

Islay Robinson

The 4th of May is an inconspicuous date for many, but for A-Level students across the UK, it’s the final chance to confirm their hoped-for University place. It’s a nerve-racking time, as students settle down to revise for their final exams—but the prospect of sending your children off to university may also be playing on your mind.

It’s a proud moment, but carries with it the prospect of providing three years of potentially extensive financial support. Your household income may mean your child qualifies for a minimal maintenance loan, and no extra grants or allowances. The combined cost of rent, fees, books and food may leave your child facing a severe shortfall.

But there are more sustainable ways of supporting them than writing a cheque for their rent.  If you’ve got the funds available for a deposit, you could consider becoming a student landlord. By purchasing a property with multiple bedrooms, you can simultaneously accommodate your son or daughter and rent out the spare rooms to cover the mortgage.

And if you’re happy to share ownership with your child, you can benefit from various tax reliefs. If your child is an owner-occupier of the property, the other rooms would qualify for tax exemption under the government’s ‘rent a room’ scheme, up to a threshold of £7,400. If it’s your child’s primary residence, a gain on the sale of the property would also be exempt from capital gains tax.

A final option would be for your child to own the property outright. To do this, you’ll need to gift or loan the deposit, and potentially have a parental guarantee on the mortgage. All of the income will then go directly to your child. Gifting cash in this way can remove funds from your own estate for inheritance tax purposes. There are many options, and it can seem like a complicated process—so speak to an advisor at Enness to discuss the best possible approach for you.

And if your child is travelling to the UK to study, this is the ideal time to consider purchasing investment property in the UK. The post-Brexit decline in Sterling means that foreign exchange rates are favourable for foreign investors. Property in big university towns typically also have excellent occupancy rates, meaning that even after your child has graduated you can keep the property on as an investment.

Enness has a wealth of experience in helping foreign investors borrow in the UK, and an exclusive relationship with FX specialist Argentex who offer significantly better rates than the banks and smaller FX brokers. Contact us today for further advice from one of our specialist advisors—and best of luck supporting your child through the upcoming exam season.