Posted on 3.5.16
New data has shown than parents will contribute to £5 billion worth of lending in 2016 to help their children to get onto the property ladder. This huge amount will make up around 25% of all mortgage transactions according to research from Legal & General, which would make the ‘Bank of Mum and Dad’ a top 10 UK mortgage lender if they were to set up their own business.
The new data highlights the difficulties for those who don’t yet own their own home. For many young adults and even those who are into their 30s, there is little chance of them buying a house without the help from their parents. This reliance shouldn’t be the case for so many, but escalating house prices have completely outstripped wages, which has simply made a lot of property unaffordable.
It’s true that parents have helped out their children in the past, but the figures show that it is becoming a more frequent occurrence. Statistics in 2014 showed that 64,000 properties were purchased using the help of gifted cash for all or part of the deposit. However, Legal & General’s research in combination with Cebr suggest that 300,000 mortgages will use such help.
The news calls out for the government to start building more homes to keep up with demand, something which they have pledged. It’s only this increase in supply that will cause prices to decrease naturally.
Protect your investment with a Deed of Trust
If you’re a parent who is giving a son or daughter a monetary gift to go towards their deposit you may want to protect your investment from future problems. If your child is buying a property with a partner and their relationship breaks down in the future, a Declaration or Deed of Trust will ensure that the value of money returns to your child and not to the partner.
The deed means that any lumps sum investments will be repaid first before detailing the percentage ownership of the property when it comes to selling on.
The conveyancing process
When you’ve had an offer accepted for a property your next step is to instruct a solicitor to complete all the legal necessities for your house purchase. As part of this process a solicitor will need to carry out legal checks if you have been given a gifted deposit to make sure we follow anti-money laundering rules. To make sure this doesn’t delay a potential moving in date, tell your conveyancer at the earliest possible opportunity.
Choosing the right conveyancer for your property
Here at Gorvins we have a specialist conveyancing team who can provide the expert service you need whether you are buying a property in Manchester, the north-west or anywhere in England and Wales. We can also help parents to make a Declaration of Trust to protect their money. Get in touch today to receive a no-obligation fixed-fee quote – call on 0161 930 5151 or fill in our online contact form.