8th Jun 2023|Sales|Lettings|New Homes|

Investing For Your Children’s Future – Why You Should Consider Student Property Investment

When your child embarks on their journey to higher education, parents want to help them as much as they can. According to Trussle, over two thirds of parents have considered purchasing a property for their child at university. Purchasing a student investment property gives your child the security of stable, affordable housing while they are away from home, whilst also adding a valuable asset to your property portfolio. Here’s why you should consider student property investment:

Benefits Of Purchasing A Student Investment Property

If you have the means to invest in property for your children, this is a fantastic way to help them with their living costs and home security once they move away from home. This is particularly true if your child is not entitled to a large portion of student maintenance loan, which could mean that they struggle to pay rent to their landlord or university halls. By pursuing student property investment, you can guarantee that your child has a safe and secure home. Furthermore, you can ensure that your child is able to save up money at university for future endeavours.

Many students struggle with adjusting to independent life outside of their childhood home and having the understanding that their student home is actually purchased by their parents can subliminally add a level of comfort and security that could make the adjustment to independent living easier. By investing in a property for your child, you can guarantee that they will have a reliable, caring landlord – you!

Long-Term Investment Strategy

In all likelihood, after your child has completed their course, they will move away to pursue their career interests. As such, it is important that your student investment property is well located for use after your child has left university should you wish to continue letting it out as a student property or sell it on. Explore postcodes near your child’s educational institution where demand is high and yields are considerable. Here are some useful tools to help you locate the best areas for investment:

  • PropertyData: this website allows you to explore rental yields by postcode. If your child vacates their student premises, you can be sure that you will achieve sustainable yields should you wish to continue renting it out to students
  • Home.co.uk: shows prospective purchasers the long-term growth of property prices and rents and levels of demand in your chosen location. Allows you to make informed decisions for your portfolio growth

New Home Property Investment

It is also advisable to purchase a student investment property that is easy to maintain and cost-effective to live in. This is why many parents choose new build properties. These accrue less maintenance costs for the parent-landlord and are energy efficient enough to keep tenant bills to a minimum. Furthermore, should you wish to sell the property in due course, you will likely have an easier sale with a new build unit that meets new, rigorous rental reform standards and comes with the most modern fixtures and fittings.

Diversifying Your Portfolio

If you are already an experienced landlord, adding a student investment property to your portfolio is a very sensible idea. This ensures that your portfolio is diversified, which secures your investments in the case of a market downturn. Furthermore, student property will always be in demand. In 2019, 1.1 million students lived away from home and relied on student accommodation during their studies. It’s no wonder demand for these properties is exceptionally high. Studies carried out by Paragon Bank found that student rentals can benefit from 18% higher yields than PRS units. Better yet, student properties typically attract more than one tenant. As such, you can benefit from impressive rental income from other sharing tenants. If you purchase a property for your child that is well-located for educational facilities, amenities and transport links, you will be able to continually rent-out your student property investment assets for years to come, providing you with stable long-term yields.

Tax Considerations

As with any buy-to-let property purchase, purchasing a student property investment for investing in your childrens’ future does come with tax implications. You ought to be aware of Stamp Duty Land Tax for buy-to-let purchases, with purchases up to £250,000 currently accruing a stamp duty rate of 3%, and properties between £250,000 and £925,000 having stamp duty at 8%.

If you charge rent for your child to live at your investment property or continue to rent your property out after your child has vacated, your profits will be subject to income tax. Should you choose to sell your student property investment after your child vacates, you will also be subject to Capital Gains Tax upon sale.

Lastly, you must consider Inheritance Tax. Many parent-landlords choose to gift parts of their property portfolio to their children. However, you would have to survive for seven years for the property you transfer to your child to fall entirely out of your estate.

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Explore Florence Place

Considering student property investment whilst your child is studying in Birmingham? In that case, Florence Place is the perfect investment opportunity for you.

This new build development in Selly Oak is short walk to the Queen Elizabeth Hospital and University of Birmingham. Students can hop on the train and ride a few brief stops to Birmingham city centre, which is home to Aston University and Birmingham City University. Set within the landmark site of the former Selly Oak Hospital, each unit at Florence Place exudes character and class. Surrounding landscaped gardens provide a peaceful sanctuary for residents to relax, and a variety of shops, cafes and bars can be found nearby for those looking to embark on a day of retail therapy and socialising.

Interested in Florence Place’s range of one- and two-bedroom apartments and family homes? Fill out the form below to request a viewing!

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