With fees tripling to £9,000 per year in 2012, university applications have soared this year, leading to an increase in demand for student properties in many locations. As a knock-on effect, so-called ‘bank of mum and dad’ landlords are snapping up properties now to let on to their offspring and their friends.

Universities and Colleges Admissions Service (UCAS) has reported a rise of 12,914 applications compared to the previous year with students wanting to secure places for 2011 before the fee changes take place in 2012.

Scott Hendry, expert at national lender Auction Finance Limited, has seen an increase in parents purchasing properties for their children and he said: “There are great opportunities at auction for those looking to invest in the student buy-to-let market, with rents on the rise and demand on the increase there are high yields available. Universities are at, or near, full capacity and good accommodation is sought after.

“Investing is definitely a growing trend amongst parents. Student property is a sound investment for the future and there are bargains to be had. We’d seen a lull in this type of purchase in the auction rooms; parents were put off by lending difficulties, red tape and a troubled property market but things are starting to change.

“Right now we’re seeing more student property purchase on our books again and I see it as a sector that is going to perform well this year. For anyone in the position to buy, it’s a smart move – you’re saving cash on rent and investing for the future. It’s a money-maker – through both equity and rental income. Rent is virtually guaranteed for two years for the duration of studies.

Auction Finance Limited offers five key tips for parents looking to invest:

Location is key. The property needs to be near shops, nightlife and within walking distance from main college buildings.
Remember a three bedroom house can easily become a four bedroom by converting one of the rooms on the ground floor.
Accommodation for five or more students will need a Houses in Multiple Occupation (HMO) license.
Avoid properties with gardens – they need maintaining.
Decide between old and new. Old will be cheaper but will require upgrading. Remember - students like space so Victorian terrace homes with their generous room sizes make a good investment.