BLOG: Are student landlords the future?
Recently, Nationwide revealed younger buyers of ‘generation rent’ (25-34) are most affected, with the percentage joining the property ladder down 23 per cent in the last decade. Those who do are likely to be relying on the Bank of Mum & Dad.
For most of us who have children in their twenties, bankrolling each child with the money they need for a deposit simply isn’t possible. That’s why they’ve been labelled ‘Generation Rent’ – ironic, as most of their parents were bought up believing renting was simply a waste of money. But with a little creative thought there may be ways that parents can help their children get on the property ladder, and use ‘wasted rent’ to build up the deposit they need to buy their own place. And perhaps the ideal time is when they first leave home to go to university.
Many parents support their children at university by paying their rent, the cost of which, according to the National Union of Students (NUS), has increased by 25 per cent over the past three years to an average of £5,244 a year, more than £15,000 for a three year course.
What if that money could be used to secure a property your son or daughter could live in, renting out the other rooms to help fund it? They could be responsible for filling the other rooms and looking after it, then at the end of their course it could be sold or rented out to other students until the time was right to sell.
For many parents, the thought of their son or daughter becoming a student landlord when they can’t even do the washing up might be a horrific one, but for others it could offer other benefits too. It ensures the quality of their accommodation and removes the headache of searching for a new place every year.
Finding the deposit needed to secure a buy-to-let mortgage, for a three bed house in the university town of their choosing, is beyond many of us. Some may be able to rely on financial support from their immediate family. For those who cannot, why not look to other people with savings to join you in the venture using crowdfunding? Recently, we have seen the increase in popularity of property crowdfunding as a way for savers to invest in property and to share in the income and any capital gains.
Crowdfunding allows landlords to raise money from the crowd for their own buy to lets. As the landlord, you only have to raise a minimum of £5,000 or 5 per cent of the purchase price, and you can source the rest from the crowd.
It’s probably too late for this year’s intake and anyway, most students prefer to live in halls for the first year, but it might be worth looking around when you drop them off for Fresher’s Week to see what’s available.
Ultimately, the likelihood of a millennial getting on the property ladder is steadily decreasing, impacted by the triple alliance of house price increases, a dearth of properties and unemployment resurfacing.
Students becoming landlords may soon be one of the few ways for young adults to get on the housing ladder. Innovative routes such as buy-to-let crowdfunding can only help to make this a reality.
Richard Bush is co-founder of residential property crowdfunding platform CrowdLords