Thursday 19th March 2015
Approximately 280,000 parents of teenagers are planning to buy a property for their child to live in whilst at university, new research from Direct Line for Business has suggested.
For 40% of parents, the main reason for putting their child on the property ladder is to ensure they are housed in a safe and stable living environment while they carry out their studies. Nevertheless, many are also doing it for their own financial benefit, with nearly a quarter (25%) hoping for regular income from the property and one in six (17%) hoping for capital returns.
It is little surprise, with rising living costs and sky high tuition fees, to see parents seeking alternative forms of income to help bankroll their kids through university. Direct Line for Business’s research also found that one in six parents (17%) see property as a way of reducing the financial burden on their children while they live away from home. By providing them with somewhere to live, it negates the need for them to rent.
Furthermore, the study revealed that more than a quarter of university students (26%) are currently living in accommodation owned by themselves, family or friends.
“It’s great to see that parents are seeing opportunities to help their children get a first step on to the property ladder and create additional income through buying a property for their university bound children,” Jazz Gakhal, Director of Direct Line for Business, said.
However, he warned, the ownership arrangement of the property needs to be made clear from the outset. “Parents should remember that if their child is letting out rooms to friends, it is the parent that will become the landlord,” he continued. “Parents who believe they may be in this situation should first check with their mortgage provider to see if this is allowed. They should then educate themselves on the regulations and liabilities surrounding student lettings.”
Gakhal also believes parents should consider landlord insurance, principally because they will no longer have a duty of care to just their own child but to their child’s friends as well. “Home insurance is not tailored to your needs in the same way as landlord insurance when renting out a property,” he explained. “Home insurance therefore may not provide you with the appropriate cover for injury to tenants, damage to other properties or cover for loss of rent resulting from fires, storms and floods.”