With property prices soaring throughout the country, it comes as no shock that the younger generation is struggling to set roots and buy their own home. With the national minimum wage shockingly disproportionate to the typical costs of living in the United Kingdom and particularly in London and surrounding areas, parents tend to lend a helping hand to assist their children in joining the property ladder.
However, this generosity which is often in the form of a gift may create a number of issues in the long term if the correct process is not adopted. More commonly lenders are requesting written confirmation from parents that they have no interest in the property. Whilst this is typically satisfied by a signed document stating such in some cases an official Deed must be entered into.
It is a common occurrence where parents opt to buy property for their children with the intention to retain some benefit for themselves however this is not the case. When purchasing a property, if one contributes to the purchase price they are likely to have a strong claim to an interest in that property. Even where a lender is not involved, this is likely to be problematic. In situations such as where a parent assists a child in purchasing a property and some years later that child enters into marriage. Their spouse may also have an entitlement to the property which can further convolute circumstances where either death or divorce is involved.
A gift with a burden is not necessarily a gift at all therefore if you are considering providing your child with financial assistance we recommend you consider all the factors including whether you intend to have any interest in the property. If this is the case, it would be more suitable to consider purchasing the property alongside your child and having some form of legal ownership of the property. Alternatively, you may consider creating a trust of property whereby you purchase the property in your name and hold it on trust for your child until they reach a certain age. Purchasing property is usually a milestone in the younger generations’ lives therefore it is important all aspects are considered thoroughly.
For further information on this topic or on any other legal area, please contact John Szepietowski or Kay Stewart at Audley Chaucer Solicitors on 01372 303444 or email email@example.com or visit our Linkedin page.
This information was correct at 1 December 2021