As Lettings Director, I’ve seen many overseas families considering the UK as a place to educate their children and consequently looking at renting or buying property in the capital for their children during their studies. It is a wise decision that presents them with plenty of investment opportunities.
Lord Bilimoria of Chelsea, CBE, DL, Chancellor of the University of Birmingham, President of the UK Council for International Student Affairs and Chair of the Advisory Board, Cambridge Judge Business School writes: “For years the UK has stood as a beacon for international education, with the likes of Cambridge, Manchester, Oxford, Birmingham and LSE renowned the world over for academic excellence and principles. I was the third generation of my family to be educated in Britain, travelling 4,500 miles to study here. I remember how daunting it was, arriving from Hyderabad, my nearest family oceans away. Yet I received the warmest of welcomes and was taken into the heart of this country.”
He’s right, the UK is renowned for its academic excellence, Oxford boasts 30 international leaders, 50 Nobel Prize winners and 120 Olympic medal winners among its ex-students and currently holds top position in the Times Higher Education World University Rankings. Cambridge alumni include Stephen Hawking, Charles Darwin, Alan Turing and Robert Oppenheimer. LSE (London School of Economics and Political Science) claims George Soros, David Rockefeller, Cherie Blair and Sir David Attenborough among its notable alumni. In fact, UK university alumni read like a roll call of the most formidable thinkers of our time: authors, scientists, philosophers, musicians, entrepreneurs and innovators that have shaped human progress and achievement. They have also come from all over the world to study in the UK with the brightest and best of their peers. According to UNESCO, more than seven million students will be studying outside their home country by 2020 and the UK Council for International Student Affairs notes that 18% of those currently in UK higher education are international students.
John Saunders, Managing Director for Coutts International comments: “When I ask international clients what makes the UK attractive to them, I get a variety of answers. While few will point to our excellent weather as a reason for coming, many will speak of our tolerant society and thriving artistic and cultural scene, while others will speak of London’s role as a financial centre and the ease of doing business. One thing however, that almost all clients talk about, is the quality of education available. Despite having less than 1% of the global population, the UK currently has seven of the top 50 Universities in the world, including three of the top 10. Furthermore, compared to Universities in the US (the world’s further education superpower) University education in the UK remains comparatively cheap, even before the recent drop in value in the pound. But it is not just higher education for which the UK is famous. Indeed, a British public school education remains highly desirable amongst the global elite, with schools like Eton, Harrow and St Paul’s transcending mere educational establishments, and instead becoming international brands. Even the Royal Military Academy Sandhurst is more than just the British Army’s officer training school, and instead is synonymous with leadership qualities and is a rite of passage for many members of the world’s most influential families.
“The continuing appeal of the UK as an education destination has also had an impact on the property market, with non-resident parents, especially from Asian countries, looking to purchase property for their children to live in while they are being educated. It is little surprise that, outside of London, two of the strongest property markets in the UK are in Oxford and Cambridge, the site of the two world famous universities. The influence of the education sector on residential property goes beyond that, however, with some clients telling me that access to the education system was the primary reason that they moved to the UK, a view which is especially strong amongst clients with very young children.”
For parents to want their children to study in the UK is perhaps unsurprising, but being prepared to relocate to the UK for that to happen is laudable. For the aforementioned schools: Harrow, St Pauls’s (West London) and Eton (Windsor), parents who are relocating will be spoilt for choice when selecting a property, either in central London or the leafy suburbs, not to mention the bonus of having the best shopping, eating, entertainment and cultural offerings of a buzzing capital city on their doorstep. When you look at it like that, perhaps relocation doesn’t seem like such a sacrifice.
For families who aren’t relocating but sending their older children to study here, the capital is equally attractive with a wealth of renowned colleges and revered universities in close proximity to each other, including the London Business School and from the renowned Russell Group, University College London, the London School of Economics and Political Science, King’s College and Imperial College. In fact, overseas students from Malaysia form the largest student group at Imperial.
Universities UK points out: “The UK continues to possess, by some margin, one of the strongest university systems in the world…We excel at a global level in the quality of our research, in the attractiveness of our courses, and in the quality of our graduates. The UK has the potential to be one of the world’s fastest growing destinations for international students, building on its current status as the second most popular destination for international students after the US.”
Both Universities UK and John Saunders, Managing Director of Coutts, have mentioned that the US holds the title for the preferred place to study among foreign students, but that looks to be changing. A recent report from education technology specialists Hobsons, showed 22% of prospective students are reconsidering their decision to study in the US in light of Trump’s election and 59% now view the UK as comparatively preferable. Once again, the UK education system is taking the world stage.
Susan Hamlyn, Director of The Good Schools Guide Education Consultants, agrees: “The one certain thing in an increasingly uncertain world is that all good parents want the best for their children and parents all over the world are as keen as ever to send their children to the UK’s most prestigious schools. Nowhere else has as many schools which, in addition to their often historic and beautiful buildings, offer a modern and internationally-minded education of the highest calibre. These schools are educating future world leaders – in science, arts, economics, sports and politics – and giving them a sense of responsibility to the global community to which we all belong.”
Some practical considerations then for parents looking to send their child to study here: I would advise them to look for a property that is of a high standard, close to amenities and within easy distance from the preferred college or university. In addition to providing their child with a comfortable and safe place to live while they are away from their parents, and providing the parents with some peace of mind, buying property might just end up paying for their child’s education.
An undergraduate course at a UK university can currently cost as much as £75,000 for international students, not to mention additional costs such as visa applications, living costs and study materials. A UK education may be the envy of the world but parents will be paying for the privilege. However, if parents choose to buy a property, especially one that is large enough to accommodate their own child and one or two friends from university, then it could generate a rental income while their child is living there. One consideration to note when buying property from overseas is currency risk which we have covered in a recent in-depth article. In addition, the capital gains from the property rising in value could mean the parents have a significant asset to sell once their child has finished their studies.
A fantastic example of this was when a client purchased a central London property prior to their son, a medical student, starting his further education in the UK. During his first year of studies, he stayed in the university’s halls and the property was rented out, using our property management services. He then lived in the property for the following four years, and after completing his studies, the property was sold. This single investment, and the capital gains accrued, covered all expenses, tuition fees and flights to and from Malaysia. As my client said at the time, you very rarely get something for nothing but this is as close as possible!
In 2016, property prices in the UK rose by nearly 8%. This year has seen England’s property prices grow by 4.4% across Q1 2017, according to the UK House Price Index. Historically, London is particularly cushioned against property market vagaries and grew by 1.5% in March this year (according to the Office for National Statistics) despite the Brexit uncertainty. Buying property in London, once again, proves to be a savvy investment.
One further thing to note, if parents put the property in the child’s name (if aged 18 and over) then they may avoid increased stamp duty on the additional property and (if they are UK residents) can shield their child from significant inheritance tax should the worst happen.
Parents wishing to give their children the best education and every chance at success can face the upheaval of relocation or the worry of sending them thousands of miles away to study in a different country. For those parents, ensuring they are living in an apartment that is safe and furnished to a high standard, close to amenities and where they will be studying will go a great way to assuaging some of those concerns. Like any doting parent, they want them to have all the comforts of home. All the better then, if the property can provide a rental income for the duration. And for those buying London property either for their child or relocating for their child’s education, thanks to capital gains, the property is likely to become a sizeable asset in the process.
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