Their own house of learning

Remember the digs from hell in 'The Young Ones'? They can be avoided, says Abigail Montrose

Although many first-year students are offered places in a university's halls of residence, this is not always the case. Wherever students live, accommodation is the major expense facing those who study away from home.

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

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
Life and Style
Living for the moment: Julianne Moore playing Alzheimer’s sufferer Alice
health
News
Jay Z
businessJay-Z's bid for Spotify rival could be blocked
News
The spider makes its break for freedom
VIDEO
Voices
A propaganda video shows Isis forces near Tikrit
voicesAdam Walker: The Koran has violent passages, but it also has others that explicitly tells us how to interpret them
Sport
Ashley Young celebrates the winner for Manchester United against Newcastle
footballNewcastle v United player ratings
Arts and Entertainment
books
Finacial products from our partners
Property search
Scottish Power was found to have unacceptably long call waiting times

Scottish Power hit with sales ban by regulator

The company was found to have unacceptably long call waiting times

This phoenix rose from the stage at the London Olympics. The insurer grew out of zombie life insurance funds

Phoenix Life: Chance of a refund for overcharged policyholders has risen

A retired adviser got his money back from the insurer after claiming he had been overcharged. Thousands of others may have a strong case
Expect a new wave of fishing expeditions by fraudsters now we can invest our life savings

Cold callers and your pension: watch out for dangerous boiler room scams

Sean O'Grady received a cold call last week that was much more sinister than normal. Yes, someone wants to get their hands on his pension...

Fuel poverty could claim 100,000 lives over next 15 years, warns energy charity

The NHS is currently bearing a yearly burden of approximately £1.5bn treating cold-related illnesses every winter

MPs call for Equitable Life policyholders to be paid £2.8bn owed by government

Hundreds of thousands of people's policies were hit when the mutual insurer almost collapsed at the turn of the century

The elderly woman's family discovered the mistake

DWP criticised after it left a pensioner £26,000 worse off

The Department for Work and Pensions has been slammed after a series of cock-ups left an elderly pensioner £26,000 worse off.

The FCA has today issued a consultation paper on its plans to tighten up consumer credit rules to give consumers greater protection on guarantor loans and in other areas

Payday loan companies must publish their rates, says CMA

A 20-month investigation concluded that a lack of price competition between lenders has led to higher costs for borrowers

Vulnerable consumers are defined as those with poor literacy skills, those who have caring responsibilities, people with disabilities, dementia or the old

Financial companies are not meeting the needs of vulnerable consumers, says City Watchdog

The Financial Conduct Authority said the industry needs to start thinking about solutions to these challenges

The FTSE 100 is inching closer to its record high but can it maintain these levels?

In 1999 stock markets quickly tumbled, losing many a fortune in the process

Tax-free savings: Freedom dawns for the junior savers caught in low-income accounts

The parents of six million children stuck with low-interest saving accounts worth more than £5bn will be able to move the cash from this April. But what are their options? Samantha Downes reports

How much lower will mortgage rates go?

Another day, another cut. As lenders compete to offer the cheapest deals, Simon Read asks if borrowers should jump in now or wait for further falls

Are bills ruining your family life? Try the lover's guide to coping with debt...

If you're in the red and can't find a way out, it's time to get some help. Neasa MacErlean hears that relationships will suffer unless you are open with your partner, but there are organisations that will put you on the right track and get you talking

How to complain: From retailers to energy suppliers, it's easier than you think

When companies let us down, millions of us just take it on the chin. Simon Read shows how to make your voice heard
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Graduate Application Support Analyst

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Reach Volunteering: External Finance Trustee Needed!

    Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

    Christine McCleave: FP&A Analyst

    £36,000 - £40,000: Christine McCleave: Are you looking for a new opportunity a...

    Recruitment Genius: Sales Executive - OTE £40,000

    £15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

    Day In a Page

    War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

    Baghdad fights to win back Tikrit from Isis – but then what?

    Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable
    Living with Alzheimer's: What is it really like to be diagnosed with early-onset dementia?

    What is it like to live with Alzheimer's?

    Depicting early-onset Alzheimer's, the film 'Still Alice' had a profound effect on Joy Watson, who lives with the illness. She tells Kate Hilpern how she's coped with the diagnosis
    The Internet of Things: Meet the British salesman who gave real-world items a virtual life

    Setting in motion the Internet of Things

    British salesman Kevin Ashton gave real-world items a virtual life
    Election 2015: Latest polling reveals Tories and Labour on course to win the same number of seats - with the SNP holding the balance of power

    Election 2015: A dead heat between Mr Bean and Dick Dastardly!

    Lord Ashcroft reveals latest polling – and which character voters associate with each leader
    Audiences queue up for 'true stories told live' as cult competition The Moth goes global

    Cult competition The Moth goes global

    The non-profit 'slam storytelling' competition was founded in 1997 by the novelist George Dawes Green and has seen Malcolm Gladwell, Salman Rushdie and Molly Ringwald all take their turn at the mic
    Pakistani women come out fighting: A hard-hitting play focuses on female Muslim boxers

    Pakistani women come out fighting

    Hard-hitting new play 'No Guts, No Heart, No Glory' focuses on female Muslim boxers
    Leonora Carrington transcended her stolid background to become an avant garde star

    Surreal deal: Leonora Carrington

    The artist transcended her stolid background to become an avant garde star
    LGBT History Month: Pupils discuss topics from Sappho to same-sex marriage

    Education: LGBT History Month

    Pupils have been discussing topics from Sappho to same-sex marriage
    11 best gel eyeliners

    Go bold this season: 11 best gel eyeliners

    Use an ink pot eyeliner to go bold on the eyes with this season's feline flicked winged liner
    Cricket World Cup 2015: Tournament runs riot to make the event more hit than miss...

    Cricket World Cup runs riot to make the event more hit than miss...

    The tournament has reached its halfway mark and scores of 300 and amazing catches abound. One thing never changes, though – everyone loves beating England
    Katarina Johnson-Thompson: Heptathlete ready to jump at first major title

    Katarina Johnson-Thompson: Ready to jump at first major title

    After her 2014 was ruined by injury, 21-year-old Briton is leading pentathlete going into this week’s European Indoors. Now she intends to turn form into gold
    Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

    Climate change key in Syrian conflict

    And it will trigger more war in future
    How I outwitted the Gestapo

    How I outwitted the Gestapo

    My life as a Jew in wartime Berlin
    The nation's favourite animal revealed

    The nation's favourite animal revealed

    Women like cuddly creatures whilst men like creepy-crawlies
    Is this the way to get young people to vote?

    Getting young people to vote

    From #VOTESELFISH to Bite the Ballot