Living & Lifestyle

Tuesday, 31 May 2016

Helping a child with their new home

The month of May with its bank holidays and hopefully spring-like weather is also when New Home Owners Day takes place. Traditionally this time of year proves to be when the UK property market experiences a bounce, the winter months all but forgotten and homebuyers keen to secure their ideal properties in time for the summer.

 

A time to celebrate

Buying a home is often one of the most stressful events someone can experience in their lifetime but once the conveyancing process, exchange and completion, removals and unpacking are done and dusted, the feeling of accomplishment is immeasurable. This is particularly true for younger buyers getting their feet on the property ladder for the very first time, often with assistance from their parents.

 

The bank of mum and dad

Estimates from the Council of Mortgage Lenders1 suggest that 38% of first-time buyers in 2014 have got their feet on the property ladder without assistance from their parents, grandparents or other sources, showing that the majority still need support. Data from conveyancing firm MyHomeMove found that 5% (64,000) of properties purchased in the UK during 2015 involved a gifted deposit - and this figure looks set to rise to 7.8% in 20162.

 

Ways to assist financially

CalculatorFrom straightforward monetary gifts, low or interest-free loans and equity release to shared ownership and guarantor provision, various options are open to parents wishing to financially assist their children. Those who have downsized to a more manageable property during retirement often find it easier to provide monetary help. Whatever the situation, though, it is important that kind parents don’t jeopardize their own finances.

The book 'Families in Transition: Social Change, Family Formation and Kin Relationships' by Nickie Charles, Charlotte Aull Davies and Chris Harris discusses how some parents help their children either with money for a deposit on a mortgage or by buying household items such as fridges and washing machines for them.3

 

Practical help

Financial assistance is, however, only one of the ways in which parents can help their children purchase a home. Parents in their 50s, and particularly those who have now retired, often possess a veritable wealth of knowledge and experience on buying a house which they are happy to pass on to their children.

Some parents have especially strong DIY skills and may even have had a career as a surveyor or a property agent. This means they will know exactly what to look for when accompanying their grown-up children on property viewings. It’s natural for first time buyers to be overwhelmed with excitement when visiting prospective homes and parents can therefore play a vital role in judging a home’s strengths and weaknesses. They will often spot things that may otherwise have been missed, such as the condition of electrical wiring, window frames and ridge tiles.

The book previously referred to includes interviews with young property buyers and their parents, one of whom relays "how he helped his daughters by doing renovation work for them on their houses...rather than providing them with financial help."

 

Additional ways in which to assist

Other parents may be experienced in the areas of finance, negotiation and law. They will in turn be able to guide their children into making a sensible offer without being clouded by excitement, before successfully navigating the often complex and daunting conveyancing process.

Additional practical ways in which parents can help their children with their new home include babysitting any grandchildren during initial periods of upheaval, such as on moving day and during subsequent decorating or renovation work. Hands-on assistance can be provided by helping your children with packing and unpacking, cleaning the new property on the move-in date and arranging the furniture to make their new home habitable as quickly as possible.

Research is also something parents can help their children with in relation to their first property purchase, compiling lists of local shops and amenities, identifying the days on which the council collects the various differently-coloured bins, and finding out train times and routes. Emotional support is also most welcome.

 

New Home Owners Day and beyond

Settling into a new home is a tiring but hugely rewarding step and any help parents can give their children, whether financial or purely practical, is always appreciated. New Home Owners Day is an excellent opportunity to reflect on your children’s achievements - which wouldn’t have been possible without your help – and to celebrate them as a family.

 

1 CML

2 MyHomeMove

3 Google Books

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