Telegraph article - ‘We gave our son £325k to buy a flat – or he would have been stuck renting forever’

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https://archive.ph/JujMC#selection-4141.0-4152.0

It found that this year, 42pc of properties bought by people aged under 55 will have help from the <a class="break-all" href="https://archive.ph/o/JujMC/www.telegraph.co.uk/money/sons-13000-more-bank-mum-dad-daughters/" rel="nofollow" target="_blank">Bank of Mum and Dad,* *equal to 335,000 transactions. By 2026 that will reach £11.3bn.

'His recent clients include Rick and Linda Denton, who rearranged their finances to free up £325,000 to help their 29-year-old son onto the property ladder.
The couple, both 63, were keenly aware that without assistance he and his girlfriend, despite both having full-time professional jobs, would be stuck in expensive rental accommodation forever.

Rick Denton knew his son would be stuck renting forever without financial help
Their gift has enabled their son to buy a two-bedroom flat in Denmark Hill, south London. Their 30-year-old daughter, a lawyer, was given a similar amount to buy her flat in West Hampstead, north London, three years ago.
“We felt it was important to give them a good start in life,” says Rick, who has worked in financial services, and is now an investor, company director, and entrepreneur. “We wanted to make sure they got through university debt free, and could buy a reasonable property in London. We didn’t want them bowed with debt.”
But equally Rick and Linda, who runs her own public relations firm, didn’t want to give their kids a completely free ride. Their son <a class="break-all" href="https://archive.ph/o/JujMC/www.telegraph.co.uk/money/property/mortgages/lloyds-offfers-first-time-buyers-mortgage-5-times-salary/" rel="nofollow" target="_blank">borrowed four times his annual salary to help pay for the rest of the property, with his girlfriend’s wages also factored in.
The couple, who live on Guernsey, were able to finance their contribution by dipping into their investment portfolio.'

Am I the only one who feels that if this continues, the young (who don't have Bank of Mum and Dad) might be totally demotivated (and that the rest of the UK would also become the inheritocracy that London is as there would be a ripple effect).

I did benefit from the inheritocracy too (parents paid my university fees/london rent for 3 years, DH and I had rent free living for 3 years at his mum's house in London), but definitely not to the tune of £325k. I am mystified as to why the son needed such a huge sum to buy a 2 bed flat (I also bought a 2 bed flat in my 20s) and the only other alternative to such a large sum would have been an existence in precarious private rental forever. They also paid his uni fees too so the parental subsidy from age 18 was much more than 325k. Apparently average gift to London FTB (cash gift) is 70k as of 2024.

There’s a lot to unpack with your post - as they say.

I’m a believer in self-determination, self-reliance, and not blaming anyone else for my lot. Taking ownership if you will.

But that’s just me, and I’m just one data point.

Logically in such a situation, the house prices should fall and become more affordable

They should never have been inflated to the extent they have been over the last few decades.

However falling house prices now does nothing for those most in housing need - the poorest and most vulnerable, who will never be able to afford to buy.

The need is more social housing.

I'm a believer in self-determination, self-reliance, and not blaming anyone else for my lot. Taking ownership if you will.

It's not about "blaming other people for your lot". It's about ensuring a civilised society where many people who through no fault of their own need help.

How does self-determination and self-reliance prevent illness or disability that limits or prevents earning ability? What about carers? And the many people doing jobs that are needed but low paid? Someone has to do the lower paid jobs - and they deserve decent housing too.

If you however want to ignore the moral arguments, there's also the economic and societal ones. It's cheaper and better for the economy and society to ensure enough affordable and safe homes for all.
Billions is spent on substandard temporary accommodation. Billions is spent on private rental housing benefits. And billions is needed for the health and social care costs of substandard housing - bad housing harms heath.

Many people are guided by emotions.

Tell the peasants who shot the landlords dead in 1949 in China to believe in self determination, self reliance and not to blame anyone else. I am not sure you would get anywhere.

We should prevent society from getting to that point.

My great grandparents owned land in China then, they lost it and have never been able to return. This is what happens when there is an angry mob and huge inequality. Lucky for them that they were able to establish good lives elsewhere.

There should of course be an adequate but basic safety net for the most vulnerable.

I dont have the numbers but I would imagine that a significant number of people make bad life choices which result in their predicament - why should the average tax payer pick up the tab for those people?

You are asking a smaller and smaller number of tax payers to pay for the rest - you see the problem I hope. There are limits - we are reaching them now, and they are a disincentive to productivity.

People may just need to accept that they will be poorer, yes, including the poor.

I would rather emigrate, as I did previously.

I mean the story is what sounds like loaded people give their kids money.

You have to look at the context of the gift in terms of the parents wealth.

A lot of people would rather give their kids money so they can potentially see grandkids and have a better life than sit with millions in the bank. It's just that most peoples ability to do this is down at the 10s of K level rather than a few hundred K.

A lot of people rather wouldn't. And how people choose to use their money is entirely up to them.

That’s it.

Leave people alone FFS.

It's going to be relatively few families who can free up £650k to help their kids onto the housing ladder, so I'd say any problem of demotivating the youth is likely to be minimal.

And while no doubt the son could have found a property requiring less than £325k deposit plus a mortgage 4 times his salary, presumably his parents just wanted to help him get the nicest property they could afford. I'd do that for my kids if I could afford to.

A 4x salary mortgage is pretty close to the max you can get so it's not as though the son isn't going to be paying for his home.

I dont have the numbers but I would imagine that a significant number of people make bad life choices which result in their predicament - why should the average tax payer pick up the tab for those people?

Of course you don’t have the numbers 🙄

This post is essentially about parents giving their children money .

It has always happened and always will.
They could havd spend it on a private education but perhaps chose to send them to a state school and instead given them money towards a property.

Their money their choice.

Well now I have one…

Don’t be so hard on yourself @MoneyNeverSleeps!

I think there’s little evidence that DC gifted money then take it easy. I’ve honestly rarely seen this. Far more in older adults who retire early. This is a far bigger problem if we want to grow productivity. When dc are younger they need to maintain the property and have a life. They really do carry on working and many have a mortgage too, as my DD does.

I think some graduates don’t seem to care about what they do and live at home. Pay a bit into household funds but don’t really seek anything better.

@TizerorFizz I suppose it depends on how much? I know a few people who scaled things back but only 1 who lives a very bohemian lifestyle. We have a mortgage still and life is expensive so despite help we do need to work & I like nice things. Although we do save a fair bit because I’m not working till 68 or whatever age they next move it out too.

Not ftft but

There was something about this on 'start the week' on radio 4 on Monday this week (23/9/24) and they interviewed the author

amzn.eu/d/e73SvMh

I meant 'not read the full thread' - oops!

I do think this will have a huge impact on social mobility and economic inequality in the UK.

I'm not sure if lots of previous posters are realising how this may affect society as a whole. It's not about one family passing on wealth to their children - it's the cumulative effects of this happening at societal level meaning the that there may well be huge disparities in wealth. This would essentially mean 'the rich getting richer and the poor getting poorer'

My great grandparents owned land in China then, they lost it and have never been able to return. This is what happens when there is an angry mob and huge inequality

It's not always an angry mob. Many have ancestors closer to home who were evicted from their lands by the landowners/landlords and had to move away from their homelands and the only work they knew - The Highland Clearances (Scotland) and The Great Hunger (Ireland).

The landlords supported by the government at the time were responsible for allowing it.

Not everyone is privileged enough to come into family money or have a high earning partner

Absolutely true - never inherit anything in my life, but I've worked hard for my family to ensure I can help them out if I need to. My care of my children doesn't stop at 18 - and I'm aware they may have to help me out when I'm not able to help myself as the years go by. We all do what we can - but people will never be equal in what they have (even the communist idealists couldn't manage that).

I'm sure if you gave 10 random 18 year olds £5000 tomorrow - the outcome of what they did with it would be very different. That will never change - it's the same for adults.

This really is the last thing this country needs. More shoddy nasty cheap over-densed modern housing. We need to look at population growth (ie who do we as a country want and need), population disparity (ie how do we properly and sensibly move population to low population areas with proper jobs/infrastructure/schools etc), location of new/remodelled industry/jobs, how people live - eg divorce creates double housing requirements - is that sustainable? etc. What we dont need are parts of the UK (ie the South close to London) being concreted over in a rush to meet "targets".

Any attempt to tax people or block people from spending on their own kids would backfire massively. Indeed, I’d say it would be political suicide. Doing the best for your children is a fundamental natural instinct. We are already losing more rich taxpayers than any other country except China. Policies like this eviscerate a country by eliminating the tax base through over-taxation. In the modern world people with assets and desirable skills can move internationally very easily.

Interesting. There was a previous thread about this a few weeks ago. The majority castigating the OP because she wanted her parents to help her get on the property ladder. The response of many posters was "absolutely not!" "I'm not giving my children a brass farthing towards a house deposit, my money is for me now." "I would never expect any help from my parents." "I struggled to purchase on my own and am proud. I would be disappointed if my children expected anything" "No way am I downsizing for my kids" etc etc.,

Whereas here people on this thread, appear to be stealth boasting about how much they can and will be helping their DC on the housing ladder. The figures of children reportedly getting HTB from their parents are absolutely shocking to me. I had no clue it was so huge a number!

No chance of helping mine, they're screwed in this country. But I was mystified on the previous thread by parents saying they could help, but that they wouldn't. I don't understand why you wouldn't if you could.

Of course a discontented society will be the result. The problem is the world economy runs on housing (and also people with influence including MPs and people in the HoL, have massive housing portfolios, for me a massive conflict of interest) so building enough property for supply, building more social housing... there's no incentive to. Any such talk by anyone in government is just pretty sound bites.

I think it's disgusting. Decent affordable housing, like clothing, should be a human right in 2024. How advanced are we that we are getting further away from that instead of closer?

That said I do think people can support their DC if they want to, even though the ramifications are ultimately going to be dire.

@DysonSphere The government is saying they will build more but I think it’s going to be very difficult. Housing has always been a yoyo type of business. Feast or famine. Good jobs then laying people off. There’s a massive skills shortage so I don’t expect much very soon.

@New2thisshizzle I do think people retiring early is an issue for this country and the government knows it. Even if DC are gifted a lot, but they need a mortgage, they work.

I’m not really sure why so many on that other thread didn’t think parents should help. I thought it was odd at the time. It felt mean. Most people I know are happy to give if they can. I do realise we have been able to give a lot but DDs love their careers. Why would they give up?

It’s one of the classic MNs contradictions; you’re a terrible parent if you can’t help pay for uni & save them a deposit. You definitely shouldn’t have more than 1 if you can’t do this or even think about a frivolous purchase. On the other hand your are an entitled, grabby child if you think your parents should help you get on the ladder if they can. 🤷🏻‍♀️

So many posters just like to be contrary.

@New2thisshizzle I think fewer people got help in our generation but it was not even discussed. I know a few who got deposits as wedding presents. We didn’t and my parents rented until DF was 72. They didn’t have a huge amount spare but DF would not have given anything. Curiously he inherited from my grandma 20 years earlier before I was born but didn’t buy a house. There was enough to do so. People don’t always do the wisest thing.

When parents help dc there is often worry about inflation and living at home forever! It’s not the best situation for anyone.