Question: Our son is heading off to university this autumn and we are considering buying a property for him to live in. Rather than him wasting money on rent, we wondered if it would be possible for him to live there and rent out the other rooms to friends. Is this something we can do, and how would it work from a mortgage perspective?
The good news is that yes, it is possible to buy a property for your child to live in while they study, and to let out spare rooms to fellow students. There are several mortgage options available, but it’s important to understand how they differ, and which one suits your situation best.
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These mortgages are only offered by a limited number of lenders and come with specific criteria. The student must usually be over 18, enrolled on a university course and have at least one year of study remaining. The property generally needs to be located within a certain distance of the university, often within 10 miles.
A parent or close family member is usually required to act as a guarantor. This means they agree to cover the mortgage repayments if the student is unable to, and they may need to offer additional security such as equity in their own home or a savings deposit held with the lender.
“Buy-for-uni” mortgages offer several advantages. They enable the student to get on to the property ladder earlier than usual, and the rental income from other students can help meet the monthly mortgage payments. Most importantly, it avoids the need to pay rent to a landlord, which over the course of a three-year degree can amount to a significant saving.
These mortgages can be an excellent solution for the right family, but they require careful consideration and a clear understanding of both the financial and practical commitments involved.
Other options to consider
A common approach is to use a buy-to-let mortgage. However, standard buy-to-let products are designed for properties being rented to tenants on a commercial basis. Most lenders will not allow a close family member, such as your child, to live in the property under these terms.
Another increasingly popular option is a joint borrower sole proprietor mortgage. This allows the parent to contribute their income to the mortgage affordability assessment without being named on the title deeds of the property.
It’s important to be aware that if your child rents out spare rooms to friends, the property may fall under house in multiple occupation (HMO) rules. This depends on how many tenants live there and whether they share facilities such as a kitchen or bathroom.
You should also factor in the stamp duty implications. If you purchase the property in your name, and you already own a home, the additional property surcharge will likely apply. If the property is purchased in your child’s name as their first home, this can often be avoided, but that will depend on how ownership is structured.
What else to think about
That means chasing rent, resolving disputes, and taking charge when things go wrong. It can be uncomfortable collecting rent from a friend who is behind on payments, especially if they are going through a difficult time financially.
It’s a good idea to put agreements in writing and be clear from the start about expectations around rent, shared costs, and house behaviour. Even with close friends, having a basic tenancy agreement can help avoid awkward conversations later.
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