Their own house of learning
Remember the digs from hell in 'The Young Ones'? They can be avoided, says Abigail Montrose
Wednesday 20 August 1997
According to figures from Barclays Bank, living in hall for one year during term-time only costs pounds 2,100 in Manchester and pounds 2,250 in London. But students living in private accommodation can expect to pay at least pounds 1,000 more than this as they will have to continue paying rent over the holidays.
And, despite the great strides made by university accommodation officers in recent years, many parents are still dismayed about the quality of the flats and houses available.
If this is the case, you might want to consider renting or even buying a home for your son or daughter to live in while at college. Some rental agencies and private landlords will let parents sign a lease even though it is their child who will live there. Parents pay a deposit and rent in advance, and are responsible.
Alternatively, you can buy a property. This may seem extravagant, but given that students may have to fork out up to pounds 10,000 on accommodation for the three years, this can make economic sense. After all, a pounds 50,000 mortgage costs around pounds 3,500 a year, which is around the same amount a student in London can expect to pay for private accommodation.
"It sounds crazy, but it makes sense," says Maureen Stone, who has bought a flat for her daughter Sophie, a student in Birmingham. "We went up to look at student flats a couple of weeks after the A-level results came out, and they were very depressing. So we were looking in an agent's window and saw flats advertised for sale at pounds 40,000 or thereabouts.
"It took most of the next day to find the mortgage - but we think we're actually saving money, and in a couple of years we should be able to sell the place for at least what we paid for it."
For parents who do not have the money to buy a second property outright, there are three ways of raising the funds. First, they can buy the property in their child's name and act as guarantor. The amount a student "buyer" can borrow will be based on the parents' income. The home will be the student's main residence so the loan will attract Miras relief, and there are no capital gains tax implications. Mortgage lenders will typically lend up to 95 per cent of the cost, subject to the usual income multiples less any outstanding mortgage.
So, if the parents have a joint income of pounds 30,000 and an outstanding mortgage of pounds 40,000, most lenders will offer up to a three times income multiple of pounds 90,000, less the pounds 40,000 outstanding mortgage, making the total loan available pounds 50,000.
Second, parents can take out a mortgage in their own name. Once their child has finished college, the parents could sell it or rent it out on a commercial basis. Residential investment property mortgages are available from a handful of home lenders, such as Halifax MSL, Woolwich Direct and Paragon.
In this case, you can typically borrow only up to 75 per cent of the value, and the cost of the loan is 0.25 per cent or more above the lender's standard mortgage rate. Because the property is not for the parents' own occupation, Miras relief is not available.
Rental income from this property is taxable, but the running costs, such as the mortgage interest payments, cost of any repairs and general wear and tear, can be offset against tax. Many parents would, of course, let their children live in the home rent-free, so the issue of rental income would not arise until they rented out the property on a commercial basis.
The third option is for parents who have no outstanding mortgage; they can borrow money for a second property against the equity in their home. They should be able to borrow up to 100 per cent of the value of the second home, providing there is sufficient equity in their own home. Miras relief is not availablen
22 August 2014 10:30 PM
16 August 2014 12:00 AM
16 August 2014 12:00 AM
08 August 2014 11:30 PM
08 August 2014 11:30 PM
01 August 2014 07:30 PM
The new product marks a shift towards 'clear, straightforward and standardised' banking products, says Simon Read
01 August 2014 07:30 PM
25 July 2014 11:00 PM
25 July 2014 11:00 PM
A London estate agent yesterday put a price on having a garden. David Pollock of Greene & Co reckons it can increase a property's value by a tenth.
How to protect your assets if the stock markets begin to head south again
Child Maintenance Service to replace Child Support Agency - but is it better?
A student's guide to financial survival: You don't have to drown in debt at university
Bargain Hunter: Kit yourself out in sports gear - at a healthy discount of up to 75%
Energy firms found guilty of bad practice could have licences revoked under Labour government
- 1 Mother fed her daughter tapeworms to make her skinny for beauty pageant
- 2 Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
- 3 Crystal Palace next manager latest: Palace consider Ally McCoist - EXCLUSIVE
- 4 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
- 5 Tim Sherwood column: 'It started as a three-horse race but turned into the Grand National'
Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
Scottish independence: English people overwhelmingly want Scotland to stay in the UK
Isis threat: Cameron wants an alliance with Iran
Michael Brown shooting: Chaos erupts on the streets of Ferguson after autopsy shows teenager was shot six times – twice in the head
Disgusting, frustrating, but intriguing: how the country really feels about its politicians
Bin bag full of cats' heads discovered near Manchester's Curry Mile
iJobs Money & Business
£20000 - £27000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...
£25000 - £35000 per annum: Harrington Starr: Service Desk Analyst - (Active Di...
£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...
£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst (Machine Lea...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony