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

As your child prepares for university, you’re likely exploring ways to best support their journey. Did you know that a significant number of parents – over two-thirds according to Trussle – have considered student property investment? Investing in property for your child while they study offers a dual benefit: providing them with stable, affordable accommodation and adding a valuable asset to your investment portfolio. Let’s explore why student property could be the right move for you.

Why Consider Student Property Investment?

For parents with the financial capacity, student property investment presents a unique opportunity to support their children’s independence and financial well-being. This is particularly relevant if your child receives a limited student maintenance loan, potentially making it challenging to cover rental costs in the private market or university halls. By pursuing student property investment, you can ensure your child has a secure and comfortable home throughout their studies. This can also empower them to save money for their future aspirations.

Beyond the financial aspect, knowing their student accommodation is owned by their parents can offer a subtle yet significant level of comfort and security as they navigate the transition to independent living. As their parent-landlord, you can guarantee they have a reliable and caring point of contact.

Student Property: A Smart Long-Term Strategy

While your child will eventually move on after graduation, your student property investment can continue to be a valuable asset. It’s crucial to strategically choose a location near their university with strong rental demand and attractive yields. This ensures that once your child has completed their studies, you have options: continue renting the property to other students or sell it. Here are some helpful resources to identify prime investment areas:

• PropertyData: This platform allows you to analyse rental yields by postcode, enabling you to make informed decisions about the potential returns from your student property investment even after your child moves out.
• Home.co.uk: Provides insights into long-term property price and rental growth, as well as demand levels in specific locations. This helps you assess the long-term value and potential of your student property investment.

Investing in New Build Student Property

Many parents considering student property investment opt for new build properties. These often come with lower maintenance costs for the parent-landlord and are designed with energy efficiency in mind, helping to keep tenant utility bills down. Furthermore, if you decide to sell the property in the future, a new build is likely to be more appealing to buyers as it will meet current rental reform standards and feature modern fixtures and fittings.

Diversifying Your Investment Portfolio with Student Property

For experienced landlords, adding a student property investment to your portfolio is a sound strategy for diversification. This helps to mitigate risk during market fluctuations. The demand for student accommodation remains consistently high. In 2019, a significant 1.1 million students lived away from home, relying on rented accommodation during their studies. Research from Paragon Bank indicates that student rentals can yield returns higher than standard private rental sector (PRS) units. Additionally, student properties often accommodate multiple tenants, leading to a potentially higher rental income. By selecting a property well-located for educational facilities, local amenities, and transport links, your student property investment can provide a stable and attractive long-term yield.

Understanding the Tax Implications of Student Property Investment

Like any buy-to-let property purchase, student property comes with certain tax considerations. It’s important to be aware of:

• Stamp Duty Land Tax for Buy-to-Let: Currently, properties priced between £125,001 to £250,000 incur a 2% stamp duty rate, rising to 5% for those between £250,001 and £925,000.
• Income Tax: If you charge your child rent or continue to rent the property to other students after they leave, the rental income will be subject to income tax.
• Capital Gains Tax: If you decide to sell your property after your child graduates, any profit made will be subject to Capital Gains Tax.
• Inheritance Tax: While some parent-landlords consider gifting property to their children, it’s important to note that for the property to fall entirely outside of your estate for Inheritance Tax purposes, you generally need to survive for seven years after the transfer.

Explore Prime Student Property Investment Opportunities Across the UK

Considering property investment for your child’s university years? Discover our diverse range of developments and investment opportunities in popular student cities across the UK. From the vibrant city of Birmingham to the thriving hub of Manchester and the renowned student city of Cambridge, our selection of investment properties is ideally suited for parents looking to enhance their portfolio while providing excellent accommodation for their children.

Ready to Learn More About Property Investment?

Do you have further questions about student property investment? Our experienced team of property investment experts at Centrick Invest is here to help. We’d be delighted to share our knowledge and advice to assist you in finding the perfect investment to meet your needs. Get in touch with us today!