Parents could be better off buying a student flat than paying children’s rent as prices in university towns rise £38,666 during a three year course.

Research from the Halifax of 65 university towns shows parents buying second homes for their children three years ago have seen house price increased 22.5% or £38,666 and valued at £210,845 today.

The data excludes London and the largest price growth were for university towns located in southern England with values in Gilford increasing by £105,362.

Guildford is the most expensive university town with average property values of £511,673 followed by Winchester at £441,273, Oxford with £424,258 and Cambridge at £397,170.

Parents with mortgages may find these flats are a valuable buy-to-let investment with long term student rental opportunities.

Towns with largest gains

Managing Director of Halifax Community Bank Russell Galley said, for parents who have bought property over the past three years for their children to live while undertaking their studies could have seen average gains of 22% on property value.

In addition to the gain on bricks and mortar they may also have benefitted from rental income from housemates or flat sharers, says Mr Galley.

The following table from Halifax shows the top ten largest gains in property values for homes in university towns from 2014 for three years to 2017.

University town	House Price	Gain in value
Guildford	£511,673	£105,362
Uxbridge	£441,273	£102,061
Hatfield	£394,487	£88,829
Bath	£384,386	£87,169
Bedfordshire	£284,707	£84,621
Cambridge	£397,170	£78,473
Reading	£385,338	£78,473
Oxford	£424,258	£78,473
Brighton	£362,618	£75,804
Chelmsford	£334,808	£75,804

The largest percentage gain was Bedfordshire up 42% or £84,621 followed by Coventry where average house prices have increased 35% from £154,573 to £207,974.

For home movers wanting to trade up to a university town, they may find they will pay a premium for the property which means they need a larger deposit or mortgage.

Bedfordshire is the lowest house price rising from £200,086 to £284,707 followed by Chelmsford with £334,808 and Guildford with the highest at £511,673.

Remortgage buyers living in these towns the higher property values give them an opportunity to release capital which they can use to improve their home such as adding an extension or new kitchen.

Larger gains over past five years

Gains over five years have been even more significant for the 65 university towns with an average rise is 38% or £57,883 benefiting parents that hold on to their homes after their children graduate.

The lack of suitable properties on the market in university towns at an affordable price for first time buyers means they must continue renting and saving for a bigger deposit.

The highest is Hatfield with property values up 74% or £168,038 and average house prices increasing from £226,449 to £394,487.

Since 2012 there are another eight university towns that have seen values increase at least £100,000 including Cambridge up £152,662, Uxbridge higher by £141,171, Oxford up £138,705 and Reading with gains of £137,626.

For the older equity release mortgage buyer living near university towns the significant gains allows them to stay in their home while accessing their property wealth to consolidate debt, for home improvements or even pay university fees for grandchildren.

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