When Will and Lilian heard their daughter Sophie was accepted at Leiden University, they couldn’t wait to celebrate! Soon after, the worries started: traveling there and back every day wasn’t an option, but the property market… Long waiting lists, high rent prices and often absolute horror stories about the quality of affordable rental properties. They decided to go a different route.
“Can’t we buy something ourselves?”, Lilian asked one night. That idea grew, because that way, they knew their daughter would be alright and they’d build something up at the same time. Pretty soon, they found a lovely little apartment just outside the city. But Sophie wouldn’t move to Leiden for another 18 months. It would be a waste to let the property stay vacant for that time, so they decided to rent it out temporarily.
Why more parents choose to buy a property for their studying child
We find an increasing number of parents choosing to buy a property for their (soon-to-be student) child. And why wouldn’t they: it offers security, stability and the property will usually increase in value over time.
It could be that your child won’t move in straight away, just like in Will and Lilian’s situation. Then, temporary letting is a good option! That way, the property isn’t vacant and you’ll generate additional income in the meantime. The following things are important:
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Mortgage and financing
Is the property financed with savings or equity, for example, or is a mortgage needed? In that case, you’ll need permission from the mortgage provider to temporarily let the property.
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Temporary or permanent?
Will and Lilian wanted flexibility; as soon as Sophie moved to Leiden, the apartment had to be available.
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Tax-related consequences
A property you buy without the intent of living there yourself, usually falls into box 3, which means that the value of the property is taxed as wealth and the rental income aren’t generally taxed. However, you can’t deduct any costs.
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Responsible letting
Will and Lilian hired us to arrange viewings, select suitable tenants, perform a complete screening of the financial situation and drawing up a legally waterproof contract.
Temporary letting and the legal ground to give notice when the property will be used by your child
The legislative amendments made July 1st 2024 have had a big impact on the property market. The Permanent Rental Contracts Act was also introduced, which serves the purpose of making permanent rental contracts the norm. So is temporary letting even possible?
A legal ground for termination is a lawful reason a landlord must have to terminate a (permanent) tenancy agreement. Without such a ground for termination, landlord can’t simply terminate the agreement. Since July 1st 2024, the legal ground of ‘Urgent personal use’ has been extended to now include the option of terminating the agreement after the agreed upon rental period to let first degree relatives occupy the property (such as parents or children).
Temporary letting and the legal ground to give notice when the property will be used by your child
At Interhouse, we work with model contracts that are specifically suited for this situation, which has been possible since July 1st 2024. This model agreement has the condition that the goal of temporary letting (with intent of occupation by a first degree relative) is recorded and that there is an agreed upon end date.
With this tenancy agreement, it was possible for Will and Lilian to temporarily let out the property with the goal to eventually have their daughter, Sophie, live there When Sophie is ready to move into the apartment, Will and Lilian are to terminate the tenancy agreement on time.
A valuable investment for both you and your child
For Will and Lilian, it turned out to be the right choice: they built equity, Sophie had a lovely place to live and the temporary rental income covered the costs.
Are you considering to buy a property for your child and renting it out in the meantime? Then it’s wise to gather the right information – legal, financial and practial information. Because with the right approach, it will be an investment that benefits everyone.
