For many parents throughout the country their child’s school days are coming to an end and university or college beckons. Halls of residence may seem a good option for the first year but what are the options after that? A further three years paying rent for a simple room in a shared flat could set you back between £12,000 - £15,000 with nothing to show for it.
Nobody is thinking about capital growth at the moment but it is a buyer’s market, and if the figures stack up it is well worth considering investing in a flat for your student child.
If you need a mortgage to finance the purchase, do you take out the mortgage over the investment property or a mortgage over the family home? What is the best option for you? We can provide independent mortgage advice and guide you through the process.
Is title to the property to be taken in name of parent or student? There may be a good tax reason for taking title in the student’s name but if you do this, it is their property to do with as they please unless safeguards are put in place. Is it a loan or is it a gift? If the parent is funding the purchase from their own resources consider taking a Standard Security over the property. A less formal Minute of Agreement setting out the terms of the loan is another option. We can advise on all of this, the best type of property to buy to get a good return on your investment and the best locations for a student flat.
The size of the property will determine how many people will be living in it. If your child is sharing the flat with other students you will require a lease. It is essential that there is a lease in place before anyone moves into the property. It should be a Short Assured Tenancy Agreement within the meaning of section 32 of the Housing (Scotland) Act 1988. You will have already invested a substantial sum of money in the property, and this is not the time to cut corners. Seek professional advice and ensure that the lease is drawn up correctly and the appropriate procedures followed.
Under part 8 of the Antisocial Behaviour etc. (Scotland) Act 2004 almost all private landlords must apply for registration with their local authority. The local authority must be satisfied that they are fit and proper persons to let property, before registering them. There are a number of limited exceptions to this rule. If for example the property is let to members of the landlord’s family only, registration is not required.
Houses in Multiple Occupation (HMOs)
An HMO is a property that is shared by three or more tenants who are not members of the same family and is occupied by them as their main residence. Persons who are owners of the property are not counted. HMO landlords must have a licence from the council. Before the council will give a landlord an HMO, it must carry out certain checks. Firstly the landlord must be a fit and proper person to hold such a licence. The council will check whether the owner has any criminal convictions.
The property must be properly managed and must meet certain standards including the following:-
- Rooms must be a decent size – each bedroom should be able to accommodate a bed, a wardrobe and and chest of drawers;
- The kitchen and bathroom facilities must be adequate for the number of people living in the property;
- Adequate fire safety measures must be installed – e.g. smoke alarms and self-closing fire dooors
- All gas and electrical appliances and installations must be safe and checked on a regular basis.
The cost of carrying out the necessary safety works and checks should not be underestimated. You should contact the local authority to request a copy of the licence application form and information about procedures, the standards you will need to meet and the fees. Please note that each local authority sets its own fees for HMO licensing. It is a criminal offence to operate an HMO without having a licence!