Helping Your Son or Daughter Buy a Property at University in Scotland
Could buying be an alternative to paying rent for three or four years?
"I'm a Specialist Mortgage Advisor who can help your property dreams come true."
Ross McMillan
Blue Fish Mortgage Solutions
If your son or daughter is heading to university in Scotland, you may be wondering whether paying rent for several years is the only option.
In some circumstances, it may be possible to help them buy a property instead — even if their own income isn’t enough to support the mortgage they need.
A Joint Borrower Sole Proprietor (JBSP) mortgage can potentially allow a parent’s income to support the mortgage while the son or daughter remains the owner of the property.
- Parents may be able to support mortgage affordability
- Son or daughter can remain the property owner
- Help available with Scottish-specific issues including ADS, LBTT and university property planning
Explore Whether Buying Could Work for Your Family
Free initial discussion • No obligation • Scotland-wide mortgage advice
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Table of Contents
Could buying be an alternative to paying rent for three or four years?
If your son or daughter is heading to university in Scotland, you may already be looking at the cost of student accommodation and wondering whether there is another option.
Instead of paying rent for several years, some families consider helping their son or daughter buy a property close to university.
The obvious difficulty is that a student may have little or no income of their own and therefore be unable to obtain the mortgage they need independently.
However, there are mortgage arrangements that may allow parents to help with affordability without necessarily having to buy or jointly own the property themselves.
One option worth considering is a Joint Borrower Sole Proprietor (JBSP) mortgage, where Mum or Dad can potentially support the mortgage using their income while the son or daughter remains the owner of the property.
Find Out Whether Buying Could Work for Your Family
Free initial discussion • No obligation • Scotland-wide advice
Can a University Student Get a Mortgage in Scotland?
Potentially, yes.
Being a student doesn’t automatically prevent someone from getting a mortgage, but the biggest difficulty is usually affordability.
A student may have:
- little or no earned income;
- part-time employment;
- an income that isn’t sufficient to support the mortgage required; or
- good future earning prospects but limited income while studying.
This is where parental support can become important.
The solution doesn’t necessarily have to involve Mum or Dad buying the property themselves.
Depending on the circumstances and lender criteria, it may be possible for a parent’s income to help support the mortgage while the student remains the person who owns the property.
How Could Parents Help Their Son or Daughter Buy?
There are several potential ways parents can help, including:
- providing some or all of the deposit;
- gifting additional funds towards the purchase;
- becoming a supporting borrower using a Joint Borrower Sole Proprietor mortgage;
- purchasing jointly with their son or daughter; or
- in some circumstances, considering a specialist student or family-assisted mortgage arrangement.
The right option depends on what the family is trying to achieve.
For many families, one of the most important questions is:
Do Mum and Dad actually need to own part of the property to help with the mortgage?
With a JBSP mortgage, the answer can potentially be no.
How does JBSP work?
| Son / Daughter | Parent / Supporting Borrower | |
|---|---|---|
| Named on the mortgage | ✅ | ✅ |
| Income can be used for affordability | ✅ | ✅ |
| Responsible for the mortgage | ✅ | ✅ |
| Named as property owner | ✅ | ❌ |
In simple terms, Mum or Dad can potentially help with the borrowing without sharing the ownership.
That distinction becomes particularly important when buying property in Scotland.
For a more detailed explanation of how JBSP mortgages work, including parental responsibility, Independent Legal Advice and eventually removing parents from the mortgage, see my UK guide to Joint Borrower Sole Proprietor mortgages.
Not Sure Whether JBSP Is the Right Way to Help?
Every family situation is slightly different. Your son or daughter’s income, your own financial commitments, the deposit available, your age and the longer-term plan can all affect which options are suitable.
I can look at the whole picture and explain whether a Joint Borrower Sole Proprietor mortgage — or another family-assisted mortgage option — is worth considering.
Get clear on what your family could realistically do before making any decisions.
Why Who Owns the Property Matters in Scotland
This is one of the most important differences between simply helping your child with a mortgage and actually buying the property with them.
Scotland has an Additional Dwelling Supplement (ADS) which can apply when someone purchasing residential property already owns another home.
The current ADS rate is 8% of the purchase price.
That can make a significant difference to the overall cost of buying.
Revenue Scotland specifically recognises the scenario of parents purchasing an additional property for a child to live in while at university. Where the parents already own their own home, the additional purchase can fall within the ADS rules even where no rent is being charged.
Parent buys the university property
If Mum or Dad already own their own home and then purchase another Scottish property for their child, the new property may be treated as an additional dwelling and ADS may be payable.
Parent and child buy together
Buying jointly doesn’t necessarily solve the problem.
If the parent becomes a joint owner and already owns another property, their existing property ownership can potentially bring the new purchase within the ADS rules.
Son or daughter owns the property
With an appropriate JBSP arrangement, the parent may be a mortgage borrower without becoming an owner of the property.
If the adult son or daughter is the sole purchaser and does not already own another dwelling, the parent’s existing property ownership does not automatically make the child’s purchase an additional dwelling simply because the parent is helping with the mortgage.
This is one of the reasons the ownership structure should be considered before deciding how Mum or Dad will help.
Tax treatment depends on the precise circumstances and should always be confirmed by the purchaser’s solicitor or appropriate tax adviser.
A Simple Illustration of Why ADS Can Matter
Imagine parents who already own their family home want to help their daughter buy a flat near university.
If they simply purchase the flat themselves or become joint owners, their existing property ownership may result in the purchase being subject to Additional Dwelling Supplement.
If instead their daughter is able to purchase the property in her own name using an appropriate JBSP mortgage, Mum and Dad may still be able to support affordability without becoming owners.
That doesn’t mean a JBSP mortgage should be chosen purely for tax reasons.
It does mean, however, that how parental support is structured can have significant financial consequences in Scotland.
What About LBTT and First-Time Buyer Relief?
Scotland uses Land and Buildings Transaction Tax (LBTT) rather than Stamp Duty Land Tax.
An eligible first-time buyer currently receives a higher LBTT nil-rate threshold of £175,000, providing a maximum saving of £600 compared with the standard residential rates.
To qualify, the buyer must meet the relevant first-time-buyer conditions, including not having previously owned residential property elsewhere.
Where a son or daughter is the sole property owner under a JBSP arrangement, the fact that Mum or Dad are supporting mortgage borrowers does not in itself make them joint property purchasers.
Again, the solicitor handling the transaction should confirm the LBTT and ADS treatment before contracts are concluded.
Is Buying at University Better Than Renting?
Not necessarily — and this shouldn’t be approached on the assumption that buying will always be financially better.
But for some families it is worth comparing the two options.
Potential advantages of buying
Instead of several years of rent being paid to a landlord, your son or daughter may:
- have a stable home throughout university;
- get onto the property ladder earlier;
- potentially remain in the property after graduation;
- build equity if using a repayment mortgage; and
- potentially benefit if the property’s value increases over the longer term.
Depending on the lender’s terms, your son or daughter may also be able to have a friend living with them as a lodger, potentially helping towards household costs.
Things that need to be considered
Buying brings responsibilities that renting doesn’t.
These can include:
- the deposit;
- LBTT where applicable;
- legal and mortgage costs;
- repairs and maintenance;
- buildings insurance;
- factoring charges for some flats;
- uncertainty over future property values;
- the cost of selling if plans change;
- what happens if the student changes university or leaves their course; and
- what the family intends to do with the property after graduation.
Property values can fall as well as rise, so buying for university should be considered as a longer-term financial and lifestyle decision rather than simply a way of avoiding rent.
Can My Son or Daughter Have a Friend Living With Them?
Potentially, yes — but there is an important distinction between having a friend living in the property as a lodger and buying the property with the intention of letting rooms to several students.
With a standard residential Joint Borrower Sole Proprietor mortgage, the property is being purchased primarily as your son or daughter’s own home. Some lenders may be comfortable with them subsequently having one friend living with them as a lodger, subject to the lender’s individual terms and conditions.
That is very different from purchasing the property with the intention of creating formal tenancies or operating it as a student House in Multiple Occupation (HMO).
What if they want to rent rooms to several students?
If the intention from the outset is for your son or daughter to live in the property while commercially letting rooms to several other students, a standard residential JBSP mortgage is unlikely to be the appropriate solution.
In Scotland, HMO licensing can also become relevant where a property is occupied by three or more unrelated people sharing facilities. The mortgage, legal and licensing requirements would therefore need to be considered under a different, more specialist arrangement.
For the type of residential JBSP mortgage discussed on this page, I would generally approach the property on the basis that it will be your son or daughter’s main home — with the possibility of one lodger only where the chosen lender permits it.
If having other students contribute towards the property costs is an important part of your plan, tell me at the outset so that we can establish whether the proposed arrangement is compatible with the mortgage before you commit to a property.
Could Your Income Help Them Buy While at University?
If your son or daughter can’t borrow enough on their own, I can look at whether your income could help bridge the affordability gap while they remain the property owner.
What About Council Tax?
If everyone living in the property is a qualifying full-time student, the property can normally qualify for a Council Tax exemption.
If non-students also live there, the position can change.
The student or property owner should register with the local council and confirm the applicable exemption or discount.
How Much Could My Son or Daughter Borrow?
There isn’t a standard “student mortgage” borrowing figure.
If using JBSP, affordability can potentially take account of the supporting parent’s income as well as any acceptable income earned by the student.
The lender will usually also consider factors such as:
- Mum and Dad’s existing mortgage;
- loans and other credit commitments;
- dependants;
- the parents’ ages;
- expected retirement income;
- the mortgage term;
- the student’s current income;
- the deposit available;
- credit history; and
- the lender’s own JBSP criteria.
This means two families with apparently similar incomes can have very different borrowing options.
Find Out What Your Family Could Potentially Borrow
A short initial conversation is usually enough for me to establish whether the idea is worth investigating further.
How Much Deposit Will We Need?
That depends on the mortgage arrangement and lender.
Parents may be able to provide a gifted deposit as well as supporting affordability through a JBSP mortgage.
What matters is establishing the whole plan before choosing a product:
- who will own the property;
- who will be borrowers;
- where the deposit is coming from;
- whether rooms will be rented;
- and what the family intends to do after university.
Don’t Forget Scotland’s “Offers Over” System
Families from outside Scotland can sometimes underestimate this part of the purchase process.
Scottish properties commonly have a Home Report, which includes a valuation, while the property may be marketed using an “offers over” price.
The advertised price and the Home Report valuation are therefore not necessarily the same thing.
If competition results in an accepted offer above the property’s mortgage valuation, the additional amount may need to come from the family’s own funds rather than being covered by the mortgage.
That means the cash required could include:
Deposit + any amount paid above valuation + legal/tax/purchase costs.
It is therefore sensible to establish the realistic mortgage and cash budget before starting to bid for property.
Does the Parent’s Age Matter?
It can.
Where Mum or Dad’s income is being used to support affordability, some lenders will consider the age of the supporting borrower when deciding the maximum mortgage term.
For example, there can be a substantial difference between arranging a mortgage for a 19-year-old student alone and a JBSP mortgage that also includes parents in their 50s or 60s.
This doesn’t mean older parents cannot help.
It means lender selection, expected retirement age and the family’s eventual exit strategy become particularly important.
What Happens When University Finishes?
This is one of the questions I think every family should consider before buying, not four years later.
There are several possibilities.
Your son or daughter keeps living in the property
If they start work locally after graduation, the property could simply remain their home.
As their income increases, it may eventually be possible to review the mortgage and see whether Mum and Dad can be removed as supporting borrowers.
The property is sold
The family may decide that selling after university is the most appropriate option.
The outstanding mortgage would be repaid from the sale proceeds.
The property is retained and rented out
If your son or daughter moves elsewhere but wants to keep the property as an investment, the existing residential mortgage may no longer be appropriate.
A suitable Buy-to-Let or other mortgage arrangement would normally need to be considered at that stage.
There is no guarantee that your child will automatically qualify to take the mortgage into their sole name later, so the likely exit strategy should form part of the original advice.
What Responsibility Does Mum or Dad Take On With JBSP?
Although the parents don’t normally own the property, they are borrowers.
That distinction is extremely important.
If the mortgage isn’t paid, the lender can look to the supporting borrowers for payment.
The mortgage can also affect Mum or Dad’s ability to borrow for themselves while they remain named on it.
For this reason, lenders commonly require supporting borrowers in JBSP arrangements to obtain Independent Legal Advice so that they understand the financial commitment they are taking on despite not owning the property.
You can read more about this in my full Joint Borrower Sole Proprietor mortgage guide.
Is Buying at University Right for Our Family?
There isn’t one answer that works for everyone.
For some families, paying rent and keeping things simple will be the better option.
For others, helping their son or daughter buy could provide:
- a home throughout university;
- an earlier start on the property ladder;
- a property they may keep after graduating; and
- potentially a better use of family financial support than several years of rent.
My job isn’t to assume that buying is automatically better.
It’s to look at your child’s circumstances + your own finances + the property + the mortgage options + what you ultimately want to achieve and establish whether there is a workable and sensible mortgage route.
Find Out What Your Family Could Do
Free initial discussion • No obligation • Scotland-wide advice
Why Speak to Me About Buying a Property for University in Scotland?
Helping a son or daughter buy while studying isn’t just a question of finding a lender willing to provide a mortgage.
The structure matters.
We may need to consider:
- JBSP lender criteria;
- parental affordability;
- the student’s income and future prospects;
- gifted deposits;
- parental age;
- LBTT and the potential impact of ADS;
- Scottish Home Reports and offers over;
- Independent Legal Advice; and
- how Mum and Dad eventually come off the mortgage.
I’ll look at the whole picture before recommending how the mortgage should be structured.
Could Buying Be an Alternative to Paying University Rent?
If your son or daughter is going to university in Scotland and you would like to explore whether helping them buy rather than rent could realistically work, get in touch.
I’ll explain the available mortgage routes, how parental support could work and the issues you should consider before deciding whether to take things further.
Explore Your Family’s Options
Free initial discussion • No obligation • Scotland-wide advice
Tax treatment depends on individual circumstances and may change. Advice regarding LBTT and Additional Dwelling Supplement should be confirmed with the solicitor or tax adviser dealing with the purchase.
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