An educated bet – why more parents are buying properties in University towns.

Oct. 1, 2010 - PRLog -- As young adults move away to university or enter their second year many of their parents are taking advantage of lower houses prices and better mortgage deals to buy property for their children to live in at university, safe in the knowledge that they have tenants lined up to pay the rent.

University towns are filling up with parents from both the UK and overseas seeking student flats, finding that buying is a better option than renting in many of the top university towns. In fact, based on an interest-only mortgage at 5 per cent interest for a two bedroom flat in many university towns recent price drops have meant that it is now better value to buy than rent. Says Tim Hammond, Chief Executive of The Buying Agents.

At universities such as Birmingham, Sheffield, Southampton, Bristol, Sussex, Newcastle-upon-Tyne, Leeds, Bath and Nottingham fewer than 20 per cent of students live in halls. “In these locations, parents are much more likely to consider buying a flat for their children’s university years, says Hammond.”

As the Nationwide announced recently that house prices have dipped again for the first time since February, there may be more price reductions ahead and more parents may be tempted to take advantage.

But like buying any property it’s important to do your homework, take professional advice and avoid the many pitfalls, particularly if you are looking to buy in an area you don’t know.

The Buying Agents Top tips for buying student properties
1.   Buying a flat with two or more bedrooms makes financial sense as it allows the child to share with a friend, and generate an income to help pay for the monthly bills / mortgage payments.
2.   Buy in the right area to maximise resale value and ensure the other room/s can be easily let. If you are buying in a town you don’t know then it would make sense to speak to The Buying Agents who have local ‘property finding; offices in many of the University towns including; Bristol, Cardiff, London, Oxford, Southampton, and Sheffield.
3.   We’d recommend holding a student property as a medium to long-term investment – beyond a child’s three or four-year degree course – to make the most of rental income and capital growth. Then when your son or daughter has settled into their career and wants to buy their first home on their own they may be able to release some equity from the student flat to fund their deposit. Says Hammond.