Parent buying continues to be popular, and it is therefore relevant to look at how the upcoming loan rules and austerity are affecting this particular type of housing trade.
The government has announced new and stricter loan rules to reduce the risk of a new housing bubble – and to ensure that the housing market does not run smoothly. You can read a deeper explanation of the new rules in our article here.
But how does the new loan rules affect one of the most popular home buyers; parent purchases. In particular, it is the expected limitation of floating rate loans that will cost parents dearly. This means that you have to borrow for your children’s apartment with a fixed rate loan.
But even though a parent purchase seems to be a slightly more expensive affair than before, it is still a good investment.
Benefits of Parenting
First of all, buying a home for them while they are students can be a huge help to one’s children, as it provides freedom and, in most cases, lower housing costs. At the same time, they can sublet a room and thus share the expenses.
But it is not only a service for the children, it can also be a good investment for the parents. An investment they can both sell as soon as their child no longer needs it, but the home can also be part of a long-term plan for parents if they, at retirement, choose to move into the city and even live in the apartment.
Sell it cheap to your children
Another benefit of parent buying is that if you sell the apartment to your child who has rented it, it can be done at a very advantageous price. If it is not a condominium, you can sell an apartment for your child at plus / minus 15% of the latest property value.
This means that your child can buy the apartment cheaper from you than you bought it for, and then later sell it at an advantageous price and not pay the tax on the profit. However, it does require that your child has actually lived in the apartment in the meantime.
Are parent purchases still a good investment?
Although you will find that a parent purchase will be a little more expensive on the basis of fixed-rate loans and thus you cannot benefit from fluctuations in interest rates, parent purchase is still a really good investment.
Not only is it isolated in isolation because it is a great help to your child in a time when study housing may be impossible to find, but it can also provide good earnings for either you or your child.