Moginie James... at home | Summer 2011
Student House Purchase Scheme
If recent reports are to be believed, a school leaver starting university this Autumn will graduate with almost £25,000 of debt – not an ideal start to life as a young professional. We chat to Neil Soundy, our partner mortgage advisor, about a clever student house purchase scheme which could actually see your off spring graduating with far more than just a degree in their pocket...
Graduating with a property asset? It sounds too good to be true – how does the scheme work? This is a brilliant plan which allows a student to take their fi rst steps on the property ladder as an undergraduate – with no deposit required – and then live in their own home, rent free, for the duration of their course. We have negotiated a deal with a number of mortgage lenders who require a 0% deposit on a fi rst home –instead of acting as a guarantor to a landlord (as parents often do for students) Mum or Dad act as guarantor to the mortgage company via a 20% second charge on their own home as security. The remaining rooms in the student house are then let to other students, and the rental
038
income received pays both the mortgage as well as the managed let fees to the lettings agency.
Owning a property will surely set a student on the right road for the future? There are of course no guarantees with the current economic climate, but a property investment could appreciate signifi cantly over the life of a 3 year university course – meaning that the student graduates with a valuable asset, and a foot on the property ladder. Whether they then choose to continue living in the property themselves, or secure an additional income stream by retaining their status as a landlord and letting the property out to new students, or instead trade up to a young professionals crashpad that’s solely their own, we can help every step of the way forwards with sales, lettings, property management and mortgage advice.
Are there implications for parents? As there will be a second charge on the parent's property, it is recommended they take independent legal advice. However, provided that the house is solely in the child's name, and it is their primary residence, then there is no capital gains tax on the property and, as long as your son or daughter doesn't breach the current limit, rental income can be offset against their
personal tax allowance. They may also be able to claim rent-a-room allowance – the Moginie James lettings team can advise on this.
The maths...
• Purchase a 4 bed house in Cathays for an average £150,000 with no deposit required • The rental income on a 4 bed student house will typically be around £1000/ month – income is gained from 3 rooms (your child effectively lives rent free) equating to £750 per month. • Deduct the Moginie James management fee of 12.5% management fee, which gives a remaining rental income of £625 – more than enough to cover the monthly mortgage payment.
The mortgage is covered, the student lives rent free and the stresses of being a fi rst time landlord are wholly mitigated by letting the property through Moginie James, who will take the remaining tenants’ rent payments and any maintenance hiccups which may arise in their stride.
Neil Soundy is based in Moginie James’ Roath offi ce – contact him on 02921 159 466 for a no obligation discussion about the student house purchase scheme and all other mortgage matters.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44