to ask if you can afford to help your kids buy a home, why wouldn't you?

[HouseWars]

Ok I'm after a range of opinions, a bit of a discussion really.

We are planning to take a chunk of money out of our own home when our children are 21 to put down as a deposit on a house for them... BUT

The house will be in our name and they will pay us 'rent' which will only be enough to cover the mortgage.
Once they have paid enough rent to have repaid the deposit, we will sell the house to them and give them all the money they gave us in rent to use as a deposit for their own mortgage.

So we aren't technically giving them anything, we aren't gaining or losing anything but it will help our children onto the property ladder.

We want to do this as we haven't got onto the property ladder until our mid 30's and spent nearly £50,000 over 10 years in rent which could have been saved for ourselves in a property and found it increasingly frustrating to lose money and not be able to decorate or have the pets we want.

Trust me, I know not everyone is able to afford to help their kids out with big money things like a house and I'm not trying to cause an argument, I'm asking more - if you CAN afford to then why wouldn't you?

Shoot, it posted before I could finish my title - it's meant to say AIBU "to ask if you can afford to help your kids buy a home, why wouldn't you?"

MNHQ, can you change that please?

I dunno but it does feel a hit mean and it makes me feel jealous.

Us 3 "kids" are in our 30s, none of us on the property ladder, all the people we know had help, including living at home to save for deposit.

It really frustrates me because i can afford a mortgage. I just cant get the deposit together.

Just check the capital gains tax implications of buying and selling a house you never live in. may be better to lend the deposit with a formal loan agreement that your children pay back. Also think about what happens if you die before they pay you back.

I think most people would help. But I hope that my children will be able to work and save their own deposit without me having to do it for them!

And yes they could even live under my roof whilst they saved (rent free too)

You'll lose a massive chunk of money in stamp duty and capital gains tax because it's a second home.

But i do think its unfair in a way because you're perpetuating a sustem where people without family help have to struggle really hard. That doesnt seem right. You should be able to work hard, save without living hand to mouth and be able to get a deposit together and a mortgage imo.

Plus 100% mortgages are back so you don’t really need to help. Also that is two stamp duty fees you will pay

Probably because things can go very wrong. Slightly different but my GPs bought my mum and dads first house for them with the same type of agreement, as in my parents would pay rent. From what my mum tells me, my dad made a few payments (mum was a sahm) then stopped. When my parents divorced it was really acrimonious and apparently they lost most of the money from the house on legal fees. Therefore my poor GPs lost all that money.

Lots of things can go wrong in life. Job losses etc. So if parents are going to help their kids buy a house, ultimately they have to be prepared to lose that money if things went wrong. Not everyone could afford to lose it so I get why they would be wary.

Check out the costs involved.

You ask why don’t all parents who can afford to help to buy? Many different reasons. It doesn’t always end well and your solution sounds fraught with pitfalls tbh. Would you allow them to choose any property they liked? What if they wanted to move to an area you disliked? Lots of potential issues.

Have you thought through the tax implications? Buying it in your name and then selling it to them seems very complicated.

I would definitely help my DC with a deposit if I can afford to do so. Probably just via a chunk of cash rather than your method (which as others have said will have complicated tax implications).

It's interesting about the tax and stamp duty - that's not something I'd thought of!

My Dad and SM are very well off and own several properties which they rent out and use as holiday homes.
When they were looking for a new property to buy I suggested they get one in our town which we could live in and pay the mortgage on, plus a bit extra so they’d make a profit. They said no. Maybe to do with tax reasons?

My parents were/are in the position to help me and my vorther buy a home and they did. I’m Beyond grateful. Im a nanny and I was getting to the age of not wanting to live in someone else’s home anymore and I couldn’t afford a mortgage and rent without help.

You now have to look at voluntary deprivation of capital if you should need care when being assessed for care costs by the local authority. They now,look back a considerable amount of time. You could be putting money into your pension to ensure a decent standard of living when you retire. I still want to eat, buy new clothes, have pets, a car and heat the house when we retire, not struggle because we jammed ds's already buttered bread.

Btw I do totally agree with a pp that by doing so I will be propagating an unfair system. But I just want to make things a bit easier for my kids.

Stamp duty and capital gains tax logistical nightmare by your gain might be less than your annual allowance.

Why do it in such a convoluted way? Why do you want control over the house? What if you don’t approve of their location choice? Or their partner?

The strings in this deal are too many for me...

Except my home is fully paid for and mortgage free and I don’t pay my parents any rent etcx

My Dad gave me a hefty deposit to put on a house when I left Uni. I used it all towards the house, he helped me do it up, sold it for a profit and since then I've been on my own two feet. I'd expect to do the same with the DCs because we're in a position where we can, but not everyone is able to and it's not mean if you genuinely don't have the funds. It's just life.

To answer your question, I wouldn't buy my kids a home even if i could afford it. I would most likely give them enough for a deposit on a suitable place. I wouldn't pay for it outright, I'm not sure why, maybe because they need an incentive to work.

Well you're paying stamp duty twice (when you buy the home, and when you eventually sell it on to them). And if you die there will be inheritance tax. Some people might want to be more independent, not renting from Mum and Dad. I have a great relationship with my parents but I wouldn't want to rent from them, it would feel like they had a say in what I did with my home. And if they have partners that might complicate things too. You might not approve of their partner, their partner might not want to be obligated to you. They might not want to be tied to living in one place. Some parents might have the money but want to save it in case they need it for old age. Some children may be irresponsible with money. I'm sure I could go on all day. There are lots of reasons people might not help even if they could afford to.

I know that it furthers an unfair system but DH and I are saving up to give DS a house deposit by his early to mid twenties. We hated renting but due to no family help we have only just managed to buy and it is through shared ownership. Apart from a student house I never want DS to have to rent.

Looks like you will have to put youru trust in them to pay you back!

I agree that I would be wary of this (if I had the money!) because at age 21 most young people are not very settled. Would this be one house for your dcs? What about girlfriends/boyfriends? Also, you are not really giving it to them if you still own the property and thus it has no financial advantage.

If you sell those houses you’ll be hit with a hefty capital gains tax bill if they’ve risen in value.

Would you not rather just have a formal agreement that the money is paid back? Are you looking to make money from your DC by selling the houses at a profit of which they’ll see nothing?