Share the Risk of Purchasing Student Property and reduce the costs
As students eagerly await exam results parents are seriously considering how they will help their children to cover the costs of a university education. With property prices rising all over the country many parents who had previously thought about buying a property for their children are now wondering if this is a viable option. Rent differs between different university sites but most students can expect to pay ?2,000 to ?3,000 per year on rent whether in the Halls or through a ?bedsit?. With the maximum student loan (outside of London) being ?4,195 most parents can expect to be asked to help out with some of the costs.
Many parents can no longer afford to take on a full mortgage in a University town (the average cost of a property close to the University of Sheffield, for example, has increased by 133% over the last four years) yet are loathed to ?waste? rent money for the three or four years their children are at University.
Could the new era of ?a co-buying network? be the answer to the student property quandary?
A co-buying network involves people from different areas, different backgrounds and different socio-economic levels jointly taking on a mortgage. Owning a property with other parents is a very real solution to the ?rental trap? problem and is becoming an increasingly popular approach.
How Does It Work?
Parents interested in co-buying property should register with UK?s foremost and most experienced co-buying network - www.youtoshare.co.uk. Within their membership profile they would make it clear that they are looking to invest in a property while their child lives in it. They would then specify the area they are looking to buy in and search for other potential co-buyers. Membership of the ?You to Share? co-buying network provides access to a ?Deed of Trust? which is a legal document specifying who is responsible for what payments and provides a ?get out clause? for each party.
This document, typically, will cost between ?350 and ?500 and is provided free through our preferred solicitor(s). Many mortgage lenders are happy to divide a mortgage between three or four individuals which means three or four sets of parents could benefit from their offspring?s time within higher education.
Example Scenario
Mr Smith?s son is going to study Engineering at the University of Leicester. It is a 4 year degree and if renting Mr Smith would be looking at paying approximately ?20,000 in rent over that period. The average price of a four double bedroom terrace house close to the Leicester University campus is ?160 000 as advertised through Keywest Estate Agents in July 2006.
Mr Smith registers with ?You to Share? co-buying network and learns that Mrs Andrews and Mr Ryan also have children about to start at the University and are interested in co-buying a property in the area. The three (or four) parents contact each other via the You to Share co-buying network and arrange to have financial and police checks conducted on themselves so that they can then share this information with each other. They, with their children, search for a property that will meet the needs of each of the students. In certain areas, council tax for students is either very low or zero rated.
You to Share would introduce the potential mortgagees to recommended professional independent brokers who would provide/arrange the most suitable finance deal within this structure. Based on 6% interest rates, the parents will be looking at a monthly interest repayment of ?800.00 which is equivalent to ?12,800 over four years. This compares with up to ?16,800 for deluxe rooms in Halls for four years, if available. (Current rates vary between ?96 and ?116 per week for up to 42 week contracts)
You to Share would arrange also for the parents to meet with a preferred solicitor to complete the formalities and also agree the necessary Deed of Trust, a binding legal document specifying what each co-buyer is responsible for and specifying how the agreement can be terminated. The You to Share co-buying network provides access to specially negotiated reduced conveyancing fees which can incorporate the Deed of Trust, free, within the package.
Following the completion of their degrees the students/parents will be the proud owners of a property that will have increased in value (currently at a rate in excess of 40%). They can decide between them whether to keep or sell it the property. Whatever their decision, each parent can secure a financial return on their investment during their child?s time at university as opposed to having ?given away? four years of rent. The profit on the property would then enable the newly qualified graduate to stay on the property ladder by using the ?profit? as a deposit for their first solo property purchase. A win-win situation.
?I wish the (?You to Share?) co-buying service had been available when I was at University,? says Julia Smart, mother of a soon to be University student. ?My parents
paid out so much on rent which they could have easily paid into a shared mortgage. I have joined the ?You to Share? co-buying network to try to invest in a small property
in Cardiff where my daughter is going to study ? it makes sense to me.?
Naturally there are compromises to be made when co-buying but many of these involve the actual living day to day with your co-buyer. Parents investing in student property are able to act as absentee landlords, secure in the knowledge that their children are coping with home sharing exactly as they would if their parents were paying rent for them.
Essex based PR consultant
Visit http://www.youtoshare.co.uk/ for more information.
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