This year’s A-level students will find out tomorrow whether they have got into the university of their choice — and their parents will weep at the exorbitant accommodation costs for years to come.
“How much?” was my reaction when my brother told me the weekly rent for university halls of residence in south London where his daughter is studying. I let double rooms to students for way less than he was paying for a single cell in a university hall, three miles from my rental flat.
Private halls of residence are much smarter than college-owned halls, I’m told, but even more expensive. Renting a shared house from a private landlord seems to be more affordable and can also be more sociable, as unlike many halls, they usually have shared living rooms where students can hang out.
As my own daughter will hopefully be going to college next year, I am already stressing about how she is going to afford her living costs. Her dad and I don’t earn nearly enough to pay for her accommodation, yet I don’t want her to finish uni with a mammoth debt hanging over her.
So, I have an as-yet half-baked plan to sell one of my rental flats in London to buy a three- or four-bedroom rental property in the city where she decides to study. We’ll be able to rent the spare rooms to her friends to cover the mortgage — so my daughter’s accommodation will be free.
For my plan to work, I need to subtly steer her towards university towns where the houses are more affordable and rental yields are high. “Southampton looks fab,” I say. “It has an 85 per cent student satisfaction rating and eight per cent rental yields.”
Frustratingly, my daughter isn’t interested in practical things like the cost of accommodation. She’s got her sights set on Bristol, which has high house prices and rubbish rental yields.
Former prime minister Tony Blair’s wife Cherie purchased a flat in Bristol for their son Euan when he attended uni in the city, but investing in a student rental there is beyond many people’s budgets. “How about Manchester?” I venture, which results in a roll of the eyes.
There are other problems buying somewhere for your offspring to live. If you already own your family home, or any other property for that matter, you’ll have to pay a three per cent stamp duty surcharge.
This will apply even if you buy the place jointly with your child, and then, if you keep the rental property, said offspring will have to pay the surcharge again when they buy their own home in the future.
And from next April, higher-rate taxpayers who buy a rental property with a mortgage will have to pay more tax on their income due to changes announced by former Chancellor George Osborne last year, unless they set up a company to buy the property. Parents will have to do their sums carefully to make sure a rental makes good financial sense.
Getting a buy-to-let mortgage might be tricky, too. Most lenders don’t allow landlords to let to family members, as it makes the eviction process harder if they default on the mortgage.
A simpler alternative, I suppose, is to encourage our sons and daughters to make new friends quickly at university or college and start looking for shared private houses as soon as possible — then at least they will get first dibs on the most affordable accommodation available in the city where they choose to study.