Advice for Chinese parents buying a student home for their child in the UK

Record breaking numbers of China’s student population have looked to international institutions across the world for opportunities and as a result the level of outbound real estate investment from China has rocketed.  But what are the benefits of sending a child to university in the UK? Three out of 10 of the world’s top universities are in the UK, including Oxford University, the university ranked first in the world. The UK is a world leader in quality research and welcomes over 400,000 international higher education students each year.

The high cost of sending a child to university is inevitable and the additional essential fees combined with expenses to maintain their lifestyle is a sizable financial investment. International students are worth £7.3 billion a year to the economy. It only makes sense then that parents find a way to supplement their own incomes.

The investment timeline associated with property can vary from person to person. You may choose to invest in property at any stage in your child's education. There are capital growth advantages for property investors who secure property when their child is born however not all parents choose to do this. Investing in property at a point closer to your child attending university can have advantages as it is still a viable source of income generation.

Aside from capital growth, buy-to-let property assures an additional income. There are generous rental yields for investors who do their research and identify the towns and cities they may not be familiar with but where rental demand is strong. The key for an investor should not automatically be familiarity but to find areas which demonstrate house price, economic and population growth. Property outside of London in the northern cities and the Midlands generally have much lower entry prices with NET rental yield.

Management companies will take care of all the affairs associated with your property such as maintenence issues and safety checks. Having a local management agent for your property is essential when there is a significant distance between you and your investment. The fee for this work starts around as 7% but varies from agent to agent. Make sure the management company in place is experienced, reputable and strives to deliver the best level of service.

So, where should you be looking to invest? Look outside of London to the Midlands and the North. The North West is a 2017 investment hotspot due to rising employment, house prices and the overall level of investment into the region. The outlook is also great for the North West in terms of rental growth forecast as Savills expect growth of 18% until 2021. The counties of Yorkshire and Birmingham are also forecast to see rental growth increases of up to 13.5% in the next five years.

The property you invest in can have a lucrative afterlife after your child’s university career is over. Property remains an excellent asset class as it continues to appreciate and earn money as your children study. Of course, the investment can be sold when your children leave the UK.

If you want more information, arrange to speak to one of the team in Hong Kong or the UK.

HK: +852 3746 2200    E:     UK: +44 (0) 113 380 8930

Source: Property Report; Why Study UK?; How Much Does it Cost to Study in the UK?; Impact of universities; Northern Powerhouse minister begins first tour since appointment

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