Becoming an Evil Student Landlord

The thing folk are missing is you say ‘son and 1 other’, so that means someone paying your son / you rent, which then brings in all the rules for being a landlord, not to mention getting a mortgage that’s not got the condition about renting and so on.

No. If the other person is the son’s lodger then they are not a landlord. This works as long as the son lives in the house too. Income up to £7,500 per year (total of all lodgers, and including bills) is tax free.

No BTL mortgage required, just tell the mortgage co and house insurance company that you have a lodger.

If you’re thinking about buying a flat you’ll need to factor in additional legal fees and also look into communal charges and contributions to sinking funds.

You’ll also need to factor in the additional mortgage payments you’ll have to make for when the property is empty, as you’re not going to get the start/end dates of ownership to match those of Uni course.

I’d also look into the interest rates of those who specialise in these types of mortgage. They are likely to be higher than the rates you’ll find on the high street. Also, if you’re the guarantor they are going to base the affordability of application on your capacity to fund the additional £1000 per month within your current finances.

I’ll speak to our property agent at work tomorrow as his son is currently at Durham Uni, and see where there opinion is.

I suspect you won’t get an answer. I’m a big leftie but your son clearly has to live somewhere and he’s going to end up paying someone’s mortgage.

OP wont be the only parent thinking about this approach so now we have competition for resource. When you have competition for resource the price of that resource goes up. When the price goes up the cost to the consumer rises to cover the outlay. Housing is no different to any other resource. Welcome to capitalism.

You’ll also need to factor in the additional mortgage payments you’ll have to make for when the property is empty, as you’re not going to get the start/end dates of ownership to match those of Uni course.

Only in the first instance. With the market being what it is for student housing (and assuming that it isn’t so far out that it isn’t lettable in future) then student lets are for a year. My daughter’s runs until 31/7 and on 1/8 she’ll move into another place. So they are paying for the time they aren’t there as part of the cost of being able to get a plce – very definitely sellers (landlord’s) market in Leamington / UoW.

FWIW £1832 per month plus all bills, for a damp, mouldy, badly maintained 4 bedroom / 1 bathroom. And as jointly and severally liable for deposit and non-payment of rent and bills, as one of the 2/4 sensible ones my daughter has to chase for rent and for people to keep the house in decent order anyway whether it’s hers or not.

Tony – I get that, but I’m not sure that “students (supported by parents) considering buying with a mortgage to actually pay less overall” it’s not a vacuum – even if you take all the parents out of the equation there are still landlords who will bid against each other, there’s a relative shortage of typical rental property so rents are determined by what they can find students willing to pay.  You could equally argue that just pony up the rent encourages the landlords to buy more expensive properties.  If the rental property was all owned by some benevolent society I could see the “lead by example” and “be the change you want to see” comparison to wood burners and 4x4s – but they are not – they are owned by people doing exactly what I’m told I should not do – but on a commercial scale.

I think it’s awful that you’re allowing your child to go to university at all, it’s only going to reinforce economic inequality.

I think it’s awful that you’re allowing your child to go to university at all, it’s only going to reinforce economic inequality.

A good point PCA!  At the moment it seems to be contributing more to his and my economic inequality – one day that might sort itself! By then it is likely he’s going to be developing products that extend people’s lives / reduce suffering and if you think about it, that is just encouraging people to live longer, consuming more of the planet’s resources, so he’s essentially causing climate change too.

As a student, my housemate’s dad bought a house for us to live in. The change in power dynamic was awful and led to an unhappy time for all.

The Parents of my house mate in my first year did exactly this.

5 of us were gonna stick together, so they bought a house, we paid rent, and it all went swimmingly.

They kept the house as a student let for another 10 years i believe, and then retired into it themselves. (from Brum to welsh Wales)

He said it was quite lucrative when they were renting it out, and we got a landlord that we got on well with. Win win.

I really can’t see how the university education system would work without buy to let Landlords. The Landlords in sheffield provided some where to live for my son. Some houses were better than other but overall it worked well. How else could it work?

The guy who rented to my daughter in Bournemouth was more of a chancer

My experience is now well out of date, but Sheffield did seem to have a decent functioning market for student rentals, probably helped by all the new blocks of student flats adding to the competition and generally cheaper housing than other cities..  If there’s enough properties then the worst ones wont let and get sold to better landlords.

My brother went to Cardiff and Birmingham and both sounded like a nightmare in comparison.

Like woodburners and Landcruisers, it’s always someone else’s problem on here.

One way or another he’s living in a house somewhere, no solution to the question either reduces or increases the number of housing units or the number of people who need one.   The question is whether they can do so cost effectively.

Woodburnbers and landcruisers on the other hand are for most users just  a way for the middle classes to cosplay as rural poor.

OP wont be the only parent thinking about this approach so now we have competition for resource. When you have competition for resource the price of that resource goes up.

But on the other side, those students are now removed from the market for a student rental, thus reducing competition for rental properties.

As a student, my housemate’s dad bought a house for us to live in. The change in power dynamic was awful and led to an unhappy time for all.

Mrs Poly shared a flat with a girl who’s parents owned it.  There were very few issues with that flat, and rent was always paid on time so power dynamic wasn’t an issue.   But certainly both son, and existing flatmate would need to consider if they are OK with it.  Whilst they get on – they aren’t best mates or doing the same course etc so I think that potentially helps with “having space”.

Mrs Poly shared a flat with a girl who’s parents owned it.  There were very few issues with that flat, and rent was always paid on time so power dynamic wasn’t an issue.   But certainly both son, and existing flatmate would need to consider if they are OK with it.  Whilst they get on – they aren’t best mates or doing the same course etc so I think that potentially helps with “having space”.

The key there is probably the flat being decent.  Mine wasn’t* and we fell out with the friend/parent who owned it.

*to be fair they did refurbish it nicely-ish in terms of paint, carpet, ikea student furniture etc.  It was just a horrible damp (I suspect re-pointed with concrete) single skin terrace that we couldn’t afford to heat effectively.

So I’ve got some time so I’ll try and do the maths. Not an expert a bored person on the internet

Googling suggests that buying and selling will cost £5000. Stamp duty, legal costs at either end, estate agents fees and arranging the mortgage

You put down a £30,000 deposit.

If you bought a 2 year savings product you’d get say 4%. So I’m saying that’s cost £2400

If you can borrow at 5% then it’ll cost £900 a month in repayments on a 25 year mortgage. Most of that is interest so you still owe £144,000 at the end.

There must be other costs i haven’t thought of. Something to do with communal spaces and the roof. Oh and some kind of life insurance and building insurance

I’ll assume that house prices are static.

So I’ve spent or lost £5000 + £2400 + 24 x £900 – £6000 which is £23000

The -£6000 is the money left over from the sale I’ve I’ve paid the mortgage

So call it £1000 a month

I’m suprised how little the fixed costs matter

I did see a first time buyer mortgage fixed at 5% for 2 years. It was £1000 to arrange. I don’t find the early close penalty

Please point out errors in my maths and assumptions

Please point out errors in my maths and assumptions

Depending on the OP’s free time, it’d make financially more sense to buy a property that needed some work as a distressed sale (i.e. auction) so you’re getting it at the bottom of the market. Then renovate it and sell in a couple of years.

Makes more sense than buying a nice house, then letting students live in it for 2 years and expecting it to still be nice…….

Yes if going for a high return investment then you’d do things differently. I’m assuming the OP doesn’t live in Glasgow and wants a habitable flat in September. I just wanted to see if the fairly daft option of owning for 2 years could ever work

So I’ve spent or lost £5000 + £2400 + 24 x £900 – £6000 which is £23000

Not sure about that £900.  Until now I think they were paying rent of £550 each?  Let’s assume that OP is paying his kid’s rent.

So with this, with a mortgage payment of 900, the other student is paying half, OP is now only paying 450 a month.

So it’s more like 5000 + 2400 + (24*450) – 6000.    Which is 12,200, or approx £500 a month.

But if OP doesn’t do this, he’ll be spending at least £550 a month anyway on Junior’s rent, so he’s actually very slightly better off, to the tune of £50 a month.  Junior’s friend is the real winner, with a benefit of £100 a month!

I think….?

I don’t disagree with anything I’ve said there. I hadn’t factored in the other student. I was just working out the total cost of the flat over 2 years. So the £1000 a month can be compared to the rent of a whole flat.

ah yeah fair enough

I don’t disagree with anything I’ve said there.

That’s very diplomatic of you 😉

Not sure about that £900.  Until now I think they were paying rent of £550 each?  Let’s assume that OP is paying his kid’s rent.

He’s not!  But he is contributing!  I think ampthill was suggesting if the mortgage was in my name then the cost to me was £1K per month which could be split between the tenants (my son and friend) which fitted with the mental arrithmetic I did, that made me ask the OP.  The same maths effectively applies if its “son” rather than me who is owner – which the various tax issues probably make more attractive.

The £2400 “interest” on the deposit is interesting to see in the maths like that.  Its probably a bit less simple than that (its also probably not as much as £30k but lets leave it at that for comparison purposes)… because if I was being sensible that extra ££ would be going in pension – so £30K is more like 42K of pension… which depending on the market could be anywhere from a loss to 5K pa. growth…  Those saying “just give it to him” are telling me to sacrifice perhaps £80K of pension, do it again for my daughter, and thats going to be noticable at retirement!

Son is quite accademic so its certainly not impossible he does a PhD – so he could gain from another 3 yrs of this.  Of course, he might not do that in the same city, might not do it at all, etc.

Depending on the OP’s free time, it’d make financially more sense to buy a property that needed some work as a distressed sale (i.e. auction) so you’re getting it at the bottom of the market. Then renovate it and sell in a couple of years.

The OP has no free time – he spends his time on here arguing with you guys!    It would need to be ready in Sept.  There are auction properties around but they often have existing tennants, or are more fundamentally flawed than just needing TLC!  I think there are vulture companies around who pick up anything that’s better than that before its even on the open market.

@doris5000 i meant of course disagree with anything you’ve said

where he is, @poly, sounds like my son’s first foray into real renting with his mate – it was advertised as Dennistoun, but my mate accurately referred to it as estate agent Dennistoun- there are nice flats there, one of my friends bought one for his children and still runs it years later.   Son’s one was cold, damp, on main road, really pretty grotty. Now has slightly better one in west end with a mate, which is a hoof from Strathclyde and his PhD.

If they are responsible, it is wroth thinking about making it permanent. How would he feel about renting to friends when he’s at least in an elevated position?  I did manage to buy with parental help after starting work (not as student) and then promptly got made redundant after 5 weeks.  Ouch.