Money Moral Dilemma: What's the fairest way to help our children on to the property ladder?

Malthusian

This dilemma is exactly equivalent to "If I want to help my children buy their first car, and one wants a BMW while the other wants a second-hand Nissan, should I give the first one ten times as much". 2/10.

HHandES

Controversial statement but ….. every parent that “helps” their child onto the property ladder in reality is pushing up house prices and forcing the next child to pay even higher prices. So why do parents do it? 

That money would be better spent on pension contributions or building their own house and increasing the housing stock.

joburton4321

Definitely give them the same amount. It’s up to them where they choose to live. If one wants to live in a more expensive area, they will need to save more to achieve it. If one is in London, perhaps they already have a more highly paid job which will enable this. 

Anything other than treating them equally is likely to cause rifts. 

primrose_penguin

They are very lucky you are in the position to help them buy their first homes. I would give them exactly the same amount of money regardless of where they are going to live, the one going to live in London will most likely be earning a higher wage and will also buy a property worth more than the others so if and when it comes time to sell will get a larger sum of money for it. You will only create problems if you discriminate between them. 

ouraggie

I too would instead pay into a pension pot for each child. The same amount.
I might also offer to match whatever deposit they manage to save so that the final amount given is down to the individual child's efforts. There may need to be a maximum donation (maybe 1 years salary) if salaries etc are very different. The pension option is far easier, though they may not be appreciative till they are 67!

stribbo

MSE_Kelvin said:

This week's MoneySaver who wants advice asks...

We're in the fortunate position to be able to give our children money towards property deposits. However, one of them is looking to buy in London while the others are looking elsewhere, where it's much cheaper. Should we give them all the same amount or take into account the differing property prices?

Unfortunately the MSE team can't always answer money moral dilemma questions as contributions are emailed in or suggested in person. They are intended to be a point of debate and discussed at face value. Remember that behind each dilemma there is a real person so, as the forum rules say, please keep it kind and keep it clean.

  If you haven’t already, join the forum to reply.

  Got a Money Moral Dilemma of your own? Suggest an MMD.

Have been in a similar position to yourselves, sat down with my kids and worked out that a percentage was the fairest way.

Malthusian

HHandES said:

Controversial statement but ….. every parent that “helps” their child onto the property ladder in reality is pushing up house prices and forcing the next child to pay even higher prices. So why do parents do it?

No they're not. If the child is eventually going to buy the house anyway, their parent helping them do it a few years earlier has no effect on overall demand for housing. Taking money out of their bank accounts or investments to help their child rather than leaving it there until they die helps keep the UK economy moving, including housebuilding.

ouraggie said:

I might also offer to match whatever deposit they manage to save so that the final amount given is down to the individual child's efforts. There may need to be a maximum donation (maybe 1 years salary) if salaries etc are very different. The pension option is far easier, though they may not be appreciative till they are 67!

In many families there are dramatic differences in salary between siblings even though they work just as hard - e.g. because one works in the voluntary sector, or one works in banking and the other in healthcare.
Pensions can be accessed at 57 (although someone in their 20s or 30s should plan for the possibility that the Government will shift the goalposts again). 

The main problem with paying into a child's pension is that the Bank of Mum and Dad is many times more useful for helping out with house purchase than with pensions. Pensions are typically paid into over a 40-50 year working life while house deposits are typically saved up for over 10 years (and when earnings are at their lowest point). Help from a parent can bring the year of house purchase forward by several years which makes a dramatic difference to someone's life. Help from a parent with a pension would usually make no noticeable difference (most people would adjust their own pension contributions to compensate, and by the time a child gets to retirement age, inheritance is usually not far off or has already happened).

If you help your child buy a house then you get to see them enjoy living in it (and have an ironclad moral right to their spare room). It's not impossible for a parent to see their child enjoying their retirement, but it takes a lot more effort.

TBagpuss

I'd give them all the same amount - they may well have different earning capacities depending on where they live, and they may not always live in the same place .

If the effect is that one won't be able to buy you could consider lending them additional amounts, so that things are fair in the longer term 

MSE_Kelvin

Sheepster said:

No offence but (there’s always a but huh) if you’re in the position to help them with what will be a huge amount of money (if this dilemma example is even real, I wonder with some of these), then surely you’re successful people who have probably built a business and will be really intelligent.
This being the case why on earth would you even need to ask randoms on the internet what you should do.

That said I can only echo what others have said. The only fair way is to give them equal. It’s their choice where they buy and nobody is forcing one of them to contemplate buying in one of the worlds most expensive cities, one which is almost a country within a country the economics are so stark.

Hey @Sheepster

Just wanted to address your doubt that Money Moral Dilemmas are genuine.

As the member of the MSE team that selects them for the Money Tips Email each week, I can assure you that they're for real - they're either emailed to mmd@moneysavingexpert.com by MSE users or suggested by other members of the MSE team (either their own or those they've been told of by friends and family).

To be honest I'm not sure we'd be able to make up anything as good as the ones we're sent, such as the dog poop dilemma from a few weeks back 

Cheers,

MSE Kelvin

onomatopoeia99

Same amount, at the same time.  If one doesn't need it for a few years they can stick it in premium bonds or some other secure investment.