Many parents abroad buy a flat for a son or daughter at a UK university, and it’s often cheaper over three or four years than paying rent. There are three common ways to do it. Each one changes who owns the property, which lender will help and how much stamp duty you pay.
Option one: the parent buys and owns it
You buy in your own name, your child lives there, and you may let spare rooms to other students. If your child pays you rent, or other students do, a buy-to-let mortgage is usually needed. If it’s a family home with no rent, some lenders offer a residential mortgage to non-residents for a property a close relative will live in.
As a non-resident who already owns a home, you’d usually pay both the 2% non-resident surcharge and the 5% higher rate.
Option two: your child owns it, you help with the mortgage
A joint borrower sole proprietor mortgage lets your income support the loan while your child is the only owner. Students rarely have income of their own, so lenders lean heavily on yours. Fewer lenders offer this to parents living abroad.
The stamp duty position can be better. If your child owns no other property, the 5% higher rate may not apply, though the 2% surcharge can still apply if your child counts as non-UK resident for stamp duty.
Option three: buy with cash, borrow later
Some parents buy outright, then take a mortgage once their child graduates and starts working in the UK. This is quick, avoids lender criteria at the start and suits families with the funds available.
What does it cost compared with renting?
Take a £450,000 flat with a 25% deposit. The loan is £337,500. At an illustrative 5.5% on interest only, that’s about £18,560 a year. Your actual rate will depend on the lender and the market at the time. Let one spare room for £900 a month and you bring in £10,800, leaving a net cost of around £7,760 a year before service charges and repairs. Many single rooms in central London student halls cost more than that over an academic year.
What should we sort out first?
Agree who should own the property, because that drives the mortgage, the stamp duty and any future tax on a sale. Speak to a tax adviser in both countries. Then we’ll find lenders that fit, working by video call and phone across your time zone. Start with our international mortgages page, the international mortgage application, or our guide to stamp duty for non-UK residents.
Frequently asked questions
Can a student get a UK mortgage?
Can I let rooms to my child’s friends?
What happens when my child graduates?
This article is general information, not tax advice. Your home may be repossessed if you do not keep up repayments on your mortgage. Changes in the exchange rate may increase the sterling equivalent of your debt. The Financial Conduct Authority does not regulate tax advice. Some buy-to-let mortgages are not regulated by the Financial Conduct Authority.
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