Buying 5-bed HMO for son in University?

Principal Private Residence Relief (PPR) – Since your son will be living in the property, part of the gain may be exempt from CGT. However, because it’s an HMO and he is renting out multiple rooms, only the portion of the property used as his main residence will qualify for relief.
Letting Relief – This was significantly reduced in 2020, but if he meets the conditions, he might get some relief for the part of the property he rents out.
Apportionment on Sale – When selling, the gain will be split between the proportion of the property used as his main residence (exempt) and the rented-out portion (liable for CGT).

Assuming he hasn’t already owned a property before then he will loose his first time buyer status so if this is just for the university period when he decides to buy his own place presumably somewhere else he would have lost this benefit.

would this be legally classed as an HMO though? If he were living in the property himself (as the owner) then wouldn't any other students living in there be lodgers as they would be sharing all the facilities?
This would negate the need for AST's just lodging agreements instead? Might be more beneficial given the RRB coming in and the effects this would have.

Reply to the comment left by Reluctant Landlord at 11/02/2025 - 09:39
I think you are right here as he is the live in landlord the renters are lodgers and not HMO tenants. Its a fraught area and I hope this lad is super mature so he can deal with the endless nonsense from the council etc and the neighbours.

I fear the days of popping in and out of property for a few years to make some cash are long gone.

I doubt this venture will make any real cash!

The number of other occupiers would still trigger all of the HMO requirements.

Leaving aside for the moment the legal/HMO discussions I would like to point out the practical and personal problems this may cause.
I know because I have been there.All (three) of our children went university in London and for the first one we bought a house for her second year. She was a very studious person and chose , she thought, similar girls to live with her. One was OK a bit whingey and unreliable with the rent. The other was very quiet because she was terrified of London life.
Our daughter was in a difficult position . She was not a tenant but nor was she the landlady and she did not want to deal with the hassles of the house but to get on with her studies. When the daughter's course had finished she was replaced by our son and his mates.
A completely different scenario .No consideration that this might be a business proposition but various drongo oafs occupied our property and we had a hellish couple of years and when they left in a heatwave it took two days to defrost the fridge.
Our third child having seen the stress caused by her siblings flatly refused to move in and we ended up paying another landlord for her shared accommodation. None of the problems we met were unsurmountable but we lived 120 miles away and ran student accommodation in Norwich.
So would I do it again? No for the reasons I have stated. Was it profitable? Yes because our ownership coincided with a boom in property prices. So business-wise it can work but be careful there are many possible pitfalls ahead.

With 5 occupants in 2 or more households, the HMO requirements of planning permission, licences, etc. would apply. The rent-a-room relief is quite small, and it may be better to set it up as a business and claim all the expenses; £80 per week may not cover the costs. This is half the usual Manchester rent. In the hands of a good head-of-house, this can work well.

Thanks for all the comments, they're very useful. I'll add a bit more detail in response to some of the comments that have been made.

We're looking at a property in Belfast close to Queen's University. It has to be an existing HMO as they're limiting the creation of new HMOs. We're looking at a 5 bed around the £250k mark. The goal is for him to be debt free at the end of the course on the basis of an interest free loan that I'll sort. Any capital gain at the end is bonus and we'll just look to manage the CGT if possible.

The HMO will only be about 45 minutes from our house outside of rush hour. He has a few good friends who are already interested in sharing and they'd be pretty reliable although we've talked through the fact of what it means to act as the landlord. The location we're looking at works OK for both student and young professional and there's plenty of scope to stay on after Uni plus little brother will possibly join him at that stage.

He's not keen on halls of residence and they're sitting at around £140 a week. He's also a bit fussy and wants to be able to get the place looking how he wants.

There's a balance of giving him some control of where he lives, letting him get some experience of running a house and trying to make the Uni experience a bit more cost effective. The bit that I'm weighing up is that he could have £250k in the bank at 4% completely risk and hassle free. Rent from the 4 rooms will be about £15k per annum and he'll potentially want to set aside £5k upfront and £2.5k per year in costs plus some contingency (he's still recovering from the shock of finding out that you have to pay tax just for having a house)..

Well I have been a student HMO Landlord for the last 15 years and I think NOW is a terrible time to buy a HMO
Even more so a Student HMO with all the changes that the RRB is bringing.
Just had the FRA ( fire risk assessment) done for another year.
Fixed a leaking shower and getting the painter in to sort out the damaged walls and ceiling !
HMO licence , RRB, Rules and Regulation in Northern Ireland ?
Have you got an accountant ?
Financial planner?
A spare £250,000 plus the other costs to comply with HMO regs

If you give your son a gift of £250k + and you die in the next 7 years your son may be liable for Inheritance Tax.
20 years ago what you are suggesting would have been a wonderful idea. Nowadays with all the restrictions I personally wouldn't do it.

In fact I have just allowed my student son to live in one of my properties rent free. I help him with the utilities and the property costs me nothing in Council Tax due to his Student exemption. I bought the property along with 1/2 acre of land which I've since had amalgamated onto the same Title number so it's effectively the back garden. I've owned the property a while and have lived in it previously. However, having only paid £43,000 for both the property and the land it is now valued at £750,000 having just received permission to build 5 houses on the land I myself may move back into the property for a couple of years and use it as my main residence to avoid CGT.