From This is Money:
According to Lloyds Banking Group, a fifth of parents give their children money to help them on to the housing ladder – often when they go away to university. Many have been encouraged to invest in property as a result of paltry interest rates on cash deposits.
But research by online property search engine propertylive.co.uk has found that parents may do better to pay for a two-bedroom flat rather than the usual one-bedroom property.
It found that in 17 out of 20 university towns and cities, including Birmingham, Exeter, Leeds, Liverpool, Reading and Sheffield, the annual income earnt from letting the second bedroom in a two-bedroom flat more than outweighed the additional mortgage repayments.
The calculations assume the buyer has a 15% cash deposit and a three-year fixed-rate repayment mortgage at 5.87%.
For example, on average a one-bedroom flat in Leeds costs £95,500 while a two-bedroom flat costs £137,500. Typical rent for a room in Leeds is £3,678 a year…