As Leaving Cert students agonise over college application forms before the CAO's February 1st deadline, many parents will already be wondering how much it will cost them to send their son or daughter to third-level education.
Unless students go to college in their home town, they and their parents will have to pay up to £1,800 a year on rented accommodation - and a growing number of parents, especially those with more than one child in college, are opting to buy a house or apartment rather than throw that money away.
There has always been a market for families looking for houses or apartments for their college-going children, says Peter Wyse, of Wyse Property Management, which both sells, lets and manages apartments. But the high price of rented accommodation, the huge growth in the number of Dublin apartments and the explosion in the number of young people going on to third-level institutions has increased demand in recent years. Agents Ken MacDonald, of Hooke & MacDonald, and Marie Sherry, of Mason Estates, agree.
High property prices have put the option out of bounds for many parents, one university accommodation officer warns. A one-bed apartment in Dublin now costs from around £90,000 plus, with two-beds going for about £130,000. Houses on the northside of the city, near a campus such as DCU, now cost over £130,000 for a three-bed semi, and well in excess of that for a property anywhere near UCD, in Stillorgan - although former three-bed local authority houses in Donnybrook, costing around £145,000 needing refurbishment, are in hot demand, says Sherry FitzGerald.
In a college town such as Maynooth you will get a two-bed apartment for around £100,000, and a three-bed house for the same price. Monica Lyons, the DIT's accommodation officer, says some parents are nearly forced into a decision to buy property because of the lack of other options. There is a critical shortage of good, affordable rented accommodation for students in Dublin, although this may eventually ease, as the last Budget brought student accommodation into the Section 23 tax incentive scheme. Basic student rents, which average about £35 a week outside Dublin, are now £45 to £50-plus a week in the capital, and may rise again in the next college year. The cheapest accommodation is digs, which costs about £55 for a five-day week, about £75 for a full week, and there is no shortage of these - but after first year, most college students simply don't want to live in them.
If you have just one child going to college, and would have to borrow all the money to buy a property, it probably doesn't make financial sense to do so. But if you have two children going to college in the same city at the same time, and have some capital which you're thinking of investing anyway, because of low interest rates, buying a property begins to make sense.
The college year is approximately 36 weeks, and assuming a rent of £50 a week, you will be paying about £3,600 a year for two students. If you already have, say, £50,000 to invest, you could borrow another £50,000 to buy a one-bedroom apartment, which at current interest rates would cost you about £3,600 over 12 months. Many families, of course, will think of buying a bigger property - either a two-bed unit or a house - with the intention of defraying costs by taking in two or three paying tenants. And you can also explore the possibility of renting out your property for the three months of summer.
In looking for a property, your first criterion should be that it makes financial sense as an investment - it must be sellable or lettable in the long-term, no matter what your college students do, says estate agent Peter Wyse. (Some students drop out, never make it, or switch colleges midstream.) But you have to balance finding an affordable investment with finding one in an area that your child will be happy to live in. It might, for example, be obvious to you that buying a house in Blanchardstown - where you can still get new houses for around £110,000, and second-hand homes for under £100,000 - is good value. Unless your child is going to attend the soon-to-open Blanchardstown DIT, they may not be content to live there. It seems that most students like to live near their campus. And although many parents will worry about the safety of different parts of Dublin's inner city, where most of the apartments for sale are concentrated, both college accommodation officers and estate agents say that the face of the city has been transformed in the past decade, and assuming pupils use their common sense, most areas are reasonably safe. Cautious parents will still probably want to do a bit more research on specific areas.
It is also worth getting as much information as you can now, instead of waiting until next September, when there is mass panic over finding your student somewhere to live. And it is probably a good idea to talk first to a third-level institution's accommodation officer to get information about various options.
Many people will be attracted to the idea of buying a property because of publicity about tax relief apartments. Peter Wyse and Ken MacDonald both say it is probably a mistake to be tempted by a Section 23 apartment, which provides tax relief against all rental income: there are about 12 to 15 such developments, consisting of approximately 700 units, still to be launched before the April, 1999, deadline. But unless you are already an investor with other rented properties, such an apartment will not yield a tax advantage, unless your child is really paying you rent from his or her pocket. (You can, of course, claim rental income from other tenants against tax.)
However, some commentators say there is a premium price on tax incentive apartments.
One west of Ireland couple who bought an apartment in Mountjoy Square nearly three years ago for their two college-going children found they had to sell it recently because its location didn't suit either of them - one was a student in DCU on Dublin's northside, the other attended UCD, a long way in the opposite direction. But they don't regret buying the flat, even though it was initially bought as a long-term investment, and are now considering buying another property to accommodate a younger college-bound child.
They bought the two-bed apartment in Mountjoy Square in March, 1996, for £58,000, and after expenses, netted £82,000 when they sold it several months ago. And they feel it was worth doing "even without taking the capital appreciation into account". If you have more than one child in college, "it's a real runner", say the couple, who recommend that anyone with one child already at college in Dublin, and one doing the Leaving, should consider buying a property. Their children found Mountjoy Square was a safe area - "although we'd be happier now than when we bought it".
They have learnt a few things from their experience, and one is that it is probably better for a student to go into a hall of residence, or student-style accommodation somewhere near their campus for their first year, simply to make friends. "Our daughter was very lonely, not being part of the campus set-up." The apartment was initially home to two of their own children, and a paying friend, and everything worked out pretty smoothly.
But there are dangers: some families have found themselves in a very sticky position, where tenants abuse the landlord's child, refuse to pay rent and so on. But this can be avoided if you have a letting agency handle the matter for you. At any rate, it is essential that you have a signed tenancy agreement with paying tenants: there is a standard agreement available from the Law Society, which you can tailor to your own requirements with your solicitor.
For many parents, getting a paying tenant will be essential, to help pay for the property - and at current rents, two paying tenants can provide up to £100 a week.
In the end, rising rents, particularly in Dublin, may provide the strongest incentive for buying your college child somewhere to live: Ken MacDonald predicts that rents, which rose by up to 25 per cent in 1998, could go up by another 20 per cent in 1999.
