More parents become landlords to support their children at university

Growing numbers of parents are becoming landlords to ease the financial burden on their university-attending children, research reveals.

Mortgage brokers Alexander Hall has found that investing in properties near top UK universities offers improved affordability and savings compared to renting from a student landlord.

The research examined mortgage costs across postcodes of the top 100 UK universities and compared them to average rental prices.

The best locations for parent investment are the University of Sunderland and Glasgow Caledonian University.

Growing trend for parents

The firm’s spokesperson, Stephanie Daley, says students face a financial burden when leaving home for university with rent and cost of living costs.

She said: “It’s for this reason that we’ve seen a growing trend of parents opting to help alleviate this strain by investing in a property for their child, and for many, this parental support is essential.

“There are many ways parents can support adult children onto the ladder, for example, through joint borrower, sole proprietor options or regulated buy to let which allow family members to live in the property or specific ‘buy for university’ products which don’t even require a deposit.”

She added: “This allows students to access housing without overstretching on rent, benefit from the lower cost of a mortgage repayment, and start building equity in a property.

“It’s a practical way for students to get ahead while studying and helps them take their first steps on the property ladder before they’ve even graduated.”

Build long-term equity

The findings highlight a trend where parents purchase properties to provide affordable housing for their children while also build long-term equity.

This approach not only reduces the strain of high rent costs but also positions students to enter the property market early.

The University of Sunderland stands out as the most cost-effective location for BTL mortgage repayments.

In the SR1 postcode, the average house price is £59,454, requiring a 15% deposit of £8,918.

With a mortgage loan of £50,535 at an average rate of 4.21% over 25 years, monthly repayments are just £275.

Best for cheaper mortgages

For savings compared to renting, Glasgow Caledonian University leads the way.

In its G4 postcode, the average monthly mortgage repayment is £806, a substantial £535 less than the £1,341 average rent.

Other affordable options include Teesside University, with monthly repayments of £361, and the University of Aberdeen at £435.

Investors for the University of Strathclyde can access mortgages that are £502 less than rent and the University of Leeds (£488).

Newcastle University and Northumbria University both do well on £484, as does the University of Sunderland (£397).