Helping child to buy a house

cjloui1

We have paid our mortgage off and we are thinking of buying a house for my daughter and her partner to live in. Currently they rent and can’t afford a mortgage right now. I’d rather they weren’t giving all their money to a landlord but could essentially pay us some rent instead. At least it’s staying in the family then. Other alternative is to help with big deposit. If we go down the purchase route ourselves do people have advice on how best to finance eg mortgage, equity release etc. 

Snookie12cat

You are better off refinancing your house depending on your age and using that money to give them a deposit (unless you have the money for the deposit already). If you buy it for them, you have to pay the 3% or 4% additional stamp duty and they don't get to use the FTB discount. Not certain on the best avenue for doing this, a broker could probably advise. 

If you did want to buy it you could go down the BTL route, but you will need to speak to a broker because not many lenders will let you rent to family on a BTL mortgage. 

cjloui1

Good point about the stamp duty. Thanks for the advice. 

jimpwarsop

You say "partner" are they not married? Are there kids ?

You are of course aware of what might happen if they split.

cjloui1

They are engaged and baby on the way 

km1500

If you give them deposit and they buy in their name then no cgt to pay on any rise in value

also if you rent to them you have a whole slew of laws etc to comply with, making tax digital quarterly tax returns, ensuring property has minimum epc later on,  etc etc. A nightmare.

jimpwarsop

cjloui1 said:

They are engaged and baby on the way 

Then I agree with the suggestion of donating a deposit, as I am currently doing.

Be aware my childs solicitor wants to know some very (to my mind) intrusive information as to where we have got £90k from.

We have been planning for years to donate for a deposit, but apparently due to money laundering regulations we have had to supply proof of:-

Cash

Premium Bonds

Unit trusts and

Shares

And proof that we have owned same for three months.

Its probably wort getting the money together in an account a.s.p. so you can "prove" you aint a drug dealer.

user1977

jimpwarsop said:

cjloui1 said:

They are engaged and baby on the way 

Then I agree with the suggestion of donating a deposit, as I am currently doing.

Be aware my childs solicitor wants to know some very (to my mind) intrusive information as to where we have got £90k from.

We have been planning for years to donate for a deposit, but apparently due to money laundering regulations we have had to supply proof of:-

Cash

Premium Bonds

Unit trusts and

Shares

And proof that we have owned same for three months.

Its probably wort getting the money together in an account a.s.p. so you can "prove" you aint a drug dealer.

All of which, for the avoidance of doubt, would be exactly the same if the child was paying with their own money, or you were buying the property in your own name - it's not a "donating deposit to child" issue, just normal money-laundering requirements for any purchase.

cjloui1

That’s helpful. Yes we have a fair amount saved up in 2 different savings accounts so think it would be clear where it’s come from. 

gwynlas

You need to take legal advice regarding the best way in gifting the deposit eg do you wish to have it recorded as a loan to safeguard a future split in the relationship?

cjloui1

I know it’s a bit of a minefield. Would be gifting it but appreciate the need for caution as you never know what the future holds.