Before the joy of watching children embark on their university journey, and the tears that often accompany the inevitable goodbye, some families may already be considering the next question: whether to invest in more permanent accommodation for their student child.

Rents in Scotland’s university cities have climbed sharply, and accommodation is scarce in Edinburgh, St Andrews and Glasgow. For parents in a position to do so, buying a flat can save on years of hall fees and done well, could help children gain a foothold on the property ladder as well as create a family asset. Done badly, it can trigger tax bills and family disputes that outlast the degree.

The first decision is whose name goes on the title. Parents can buy in their own names, which enables them to retain control if a relationship breaks down or circumstances change. But if they already own their main home, the purchase will usually attract Additional Dwelling Supplement (ADS) charges on top of Land and Buildings Transaction Tax (LBTT), which increases the upfront cost considerably.

Buying in the child’s name, funded by a gift of the deposit or the full price, can reduce that immediate tax bill, but brings its own risks. The flat becomes part of the child’s estate, exposed to their potential bankruptcy, divorce or death. It may also affect their first-time buyer status when they come to purchase a home of their own.

A third route, less commonly used but worth knowing about, is a trust. Parents act as trustees and hold the property for their child’s benefit rather than transferring ownership outright. This can protect the asset if the child later divorces or runs into financial difficulty, and depending on how it is structured, may preserve the child’s first-time buyer status for later in life.

A trust deed can also be written to give a child use of the flat while they study, while leaving the parents discretion over what happens to it afterwards, which is useful where there are siblings to consider. Trusts carry their own tax and administrative demands, however, and are not the right answer for every family.

How the purchase is funded matters as much as how it is owned. A gift towards a deposit is normally treated as a Potentially Exempt Transfer for Inheritance Tax (IHT) purposes, meaning its value falls outside the parents’ estate if they survive seven years from the date of the gift. The same applies to transferring an existing property into a child’s name, though a parent who continues to benefit from that property after the transfer risks undoing IHT planning.

The questions that matter most are often the ones nobody wants to ask before the money changes hands. What happens to the flat once the degree finishes: is the plan to sell it, or keep it as an investment? Will other children be treated equally when it is their turn? What happens if the marriage or the family relationship breaks down along the way?

With LBTT raising a record £760m in 2025-26, and ADS accounting for around 33% of residential LBTT revenue, the cost of an ill-considered structure can be significant. Consulting an adviser who specialises in estate planning at the outset will avert paying for the wrong decision later down the line.