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Renting vs buying: Should you invest in student property?

Could you make a profit out of going to university? Joshua Collaco is in his second year of a fluid dynamics engineering course at Bath University. He wants to work for Nasa when he graduates, and the income he is getting from his three-bedroom semi-detached property is helping him to avoid student debt.

 

Joshua bought the property through Northstar Homes, a service that aims to help students and their parents to find suitable property that they can buy with a 100pc mortgage through Bath Building Society. The property ends up in the student's name, but the mortgage company puts a second charge on the parents' property.

 

Instead of paying the average £352 a month for student halls at Bath, or even higher costs for off-campus rental accommodation, he is paying a mortgage of £973 on the property, which he bought for £170,000. However, he is making a profit on the accommodation because he is sharing the house with three friends – his monthly rental income is £1,400. Parents whose children are at university could save their student children hundreds of pounds a year if they opt to help them buy a property to share with friends during their studies.

 

This week is the deadline for prospective students to hand in their university application forms. With rental costs rising faster than inflation in many student cities, the difference in cost over three years could be considerable.

 

For example, a student at the University of Exeter, where the average rental cost for a student is £94 a week, could instead share a buy-to-let three-bedroom house worth an average of £217,000. By renting out two rooms to fellow students at the average rate, parents could allow their own child to live rent-free, rather than racking up further debt.

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