Buying 5-bed HMO for son in University?

Hello,
I would not use this approach as your son will try and be poacher and game keeper. He will have to live with 4 other people yet police how they are using his property. And assuming he is only 18/19/20 years of age its not really adding to the university experience for him. There are tax advantages but the social aspect will definitely suffer. I would invest in another property and rent it out and let him rent a room in third party property.

Thanks to everyone who responded, much appreciated.

The responses were overwhelmingly negative about the idea and I appreciate why. Digging deeper, the risks and red tape are bigger than I’d anticipated, particularly relative to the likely gains.

I’m also looking at what student rentals are coming available now and I’d say that the rentals offer better accommodation in better locations than I’d be able to buy with my budget. Not sure what will still be available when his group are ready to commit to a lease but overall I think that renting is a better option.

Reply to the comment left by Godfrey Jones at 11/02/2025 – 12:54
You won’t avoid CGT as will be chargeable for the time it was not your main residence less any PPR, allowable expenses and CGT allowance

I did this a different way. I bought a house near me and I managed it for students. Then this allowed my daughter to choose wherever she liked to be a tenant.
Also she didn’t have the responsibility of collecting rents from friends or dealing with repairs.
As I have been a student and those properties where the tenant is also the landlord suffer from, oh mate I’ll pay you next week, oh and the week after that etc

I might get a lot of flack for this but I truly believe in property especially as it has provided me with financial freedom for the past 10 years. I would suggest set up a limited company with yourself and your son as shareholders. Buy the hmo in the limited company (the money you put in as deposit becomes a director loan that company pays you back over time) with a 75% mortgage. Do your numbers so that the rental covers the costs and produces an income (by the way £80 a week sounds very low). That leaves you with funds to buy two more HMOs in your limited company. By the time your son finishes university he will have a share of a limited company that has a value of around £1m plus both of you an annual income. I would suggest educate yourself a bit around HMO as a property strategy. Good luck.

Reply to the comment left by Tim Haq at 15/02/2025 – 10:22
I don’t know how you’re valuing the company at £1m by the time the son graduates, unless you’ve accidentally forgot to deduct the company’s liabilities – i.e. 3 commercial mortgages at 75% LTV, unless you think the rent will have paid these off in just 3 years.

Reply to the comment left by Reluctant Landlord at 11/02/2025 – 09:39
More than 2 lodgers makes it an HMO.
Howevervrhere are some differences in the rules.

Reply to the comment left by Jim K at 15/02/2025 – 13:08
fair enough. Might be worth the OP sticking to a three bed then perhaps, but of course the numbers need to stack up. TBH the way it is, and the current uncertainty with it all means either the parent or son (or both) will need to keep on top of legislation etc. Who needs that stress when you are trying to also adapt to Uni life?
Unless the OP is going to effectively run all this for the son, for the sake of three years and leaving the money in the bank/investing in another option, might be the less stressful way to go.

Reply to the comment left by Richard at 11/02/2025 – 12:18
HMO’s do make money. I have one remaining of my portfolio to sell. But in Middlesbrough. You can’t transfer the license, a new on will have to be applied for, mine is about 600 sterling. It will be inspected and the council come up with all sorts of relevant but also irrelevant and incorrect things they demand you need to do. It would actually be best if “you” are the landlord, it will be very hard for him to deal with tenanting issues. Don’t go for first year students. they are messy.

My first house (right out of Uni) was a 6-bed HMO where I lived with 5 friends. I also renovated it myself. I was a bit older than your son, but I learned an enormous amount from that first house, both about property, and about managing people. 20 years later I’m still renovating HMOs!
A close friend just bought a fixer-upper HMO for his son in uni. They both worked incredibly hard fixing it up. . I was worried about because the son and his friends are all semi-pro musicians on the side, which can come with lifestyle challenges. But he has been managing all of that very well, in part because the renovation gave him a sense of ownership.
So my one piece of advice would be, if you buy an HMO for your son, make sure he is heavily involved in fixing it up. That will teach useful lessons and empower him to deal with friends if they don’t treat the property right.

It’s hard to predict whether an HMO will be a better financial investment than other simpler options such as the stock market, especially on the short time-scale of a degree. But I think the opportunities for personal growth are significant enough that I am planning to do something similar for my children when they go to uni.