Savills Portugal

As term begins in universities across Scotland, many students will be smarting at the cost of student rents and wondering how they might afford to keep on top of their payments over the course of the next four years. In other cases, parents of some lucky students will be hoping that buying a house or flat for them to live in while at university will turn out to be a wise investment.

Parents buying flats for children at university are now a major influence on the market in smaller university towns. My colleagues from across Scotland see many parents snapping up properties for their offspring, particularly in Dundee, Aberdeen, Edinburgh, Stirling and St Andrews. The latter has a large proportion of students living in the town, including many from abroad, and we see a number of parents buying on their behalf at the top end of the market, even up to the £1 million level.

However, for those of us with children at university, but without millions of pounds to spend, it is worth going to a mortgage broker and asking how much you can borrow against an affordable deposit in order to buy a decent flat or house. With interest rates currently being low, the monthly mortgage payments should be recoverable by letting out one or two rooms to fellow students.

The pros are that you will own the property and that your son or daughter can live rent free. You will also benefit from any capital growth if the property goes up in value while they complete their degrees. In popular locations like St Andrews or Edinburgh, you can supplement the income with holiday lets, particularly during the Edinburgh Festival, Hogmanay or golf season.

The cons are that you will be responsible for maintenance. Students can be hard on properties. If there are three or more people unrelated to the owner you need a House of Multiple Occupation (HMO) licence, which can be hard to obtain in some locations, and which can restrict how many rooms you can rent out.

Interest rates are likely to go up in the future so budget cautiously and make sure you can cover any rises. You'll have to pay income tax on the rent which will reduce any profit, and remember that house prices can go down as well as up.

Popular places to buy are normally centrally located, but you can get more for your money and still receive a good rental income for those just outside the city centre where there is still a market particularly among final year and post-graduate students who are looking for relative peace and quiet to study.