Should you pay for 'res' or buy student accommodation?

Students who choose to study away from home need accommodation, and at this time of the year that always raises the question for parents of whether they should plan to pay for ‘res’ or other rented space, or decide to buy their own student flat or house.

“Residence fees have increased in line with course costs and are now around R25 000 to R30 000 a year for a single room with meals during term-times. And the costs of staying in a student commune are roughly the same, with the average room rate being around R1200 a month and provision having to be made for meals and transport,“ says Berry Everitt, CEO of the Chas Everitt International property group.

“The accommodation outlay for a typical three-year degree is thus around R90 000 – an amount many parents feel could be better used to help buy a student flat or house on which they stand to make some return.”

For example, he says, purpose-built bachelor or studio flats for students have proliferated in recent years around many SA universities, and prices have shown a steady increase to around R500 000 on average, which at the current interest rates puts the annual bond repayment total at around R55 000, after payment of a R50 000 deposit.

“On top of this, parents will need to make provision for monthly sectional title levies and food costs, taking their three-year outlay to around R300 000. However with student numbers and demand for accommodation continuing to rise at most SA universities, they do stand to make a good profit on resale at the end of the study period.”

Writing in the Property Signposts newsletter, Everitt says another option for parents is to buy a bigger flat or a house where spare rooms can be let out to other students, with the rentals being used to offset the monthly home loan repayments while the property grows in value.

“This may seem like the best choice but here, too, there are additional factors to be taken into account such as maintenance costs in the case of freehold homes, the provision of kitchen equipment, furniture and cleaning services in a commune, and the fact that a student who lives further away from campus may need transport.

“In short, before making any decision, parents need to look carefully at the numbers and seriously consider other factors such as proximity to the university and maintenance of the property, preferably with the help of a seasoned estate agent who specialises in student accommodation.”

Article by: www.chaseveritt.co.zaww.ChasEveritt.co.za