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.

My parents gave me a significant sum towards a deposit, but absolutely nowhere near 325k! They're pretty well off, but not to the tune of having a spare 650k (two kids).

I'll help my children if I can, but I do worry it won't be anywhere near enough.

Yes, this is exactly what we will be doing too. If student loans don't form part of the affordability checks (not sure if I got that right), we will help them as icy as possible with housing and education costs too.

Yes, I think what's happened now is we have property-wealthy baby boomers, with children who already have got on the ladder and made their own way when the older generation dies. The next generation then understandably sees that the inheritance will benefit their children more than themselves and passes it on. Fully expect that to be the case when my parents pass on (hopefully not for years though)

Its awful for people who couldn't get on the property ladder in that generation, I agree.

Both our DC earn well, so don't need bank of mum and dad to get on the property ladder. Also in London.

You think it's bad here you should see Switzerland, the average first time buyer is in their 50s because the average first time buyer house price is £1m. The "average" range also goes up to £12m!

I helped my ACs to buy their houses. I had the money, and it was no one else’s business. 🤷‍♀️

i think it is how common it is. over 60% of FTB nationwide. Plus large sum in pricer parts of London which will turn large swathes of London into an inheritocracy, and push people with more modest gifts/support out.

In the past maybe 30k would have been a decent gift when a 2 bed flat in denmark hill was 300k but given graduates salaries have stayed stagnant, the determinant would increasingly be your parents wealth.

If I was 18 today and my parents were not wealthy and I wasn't likely to be the top decile of earners, I might be tempted to opt out of society (hence the high rate of economically inactive Gen Z men who are NEET). I am only 31 (so not an old millennial), DH and I saved up 70k in 3 years living at his mum's house with a 75k household income and bought in London in our 20s (I was 26), I am not sure this would be affordable today and am not sure if this would be possible in 10 years time. This was what allowed us to stay in London, our incomes have since increased to 121k combined.

My parents did this for my brother and I.

It’s their money to spend as they wish, I take no issue with it. Not my money, not my business 🤷🏻‍♀️ I also don’t subscribe to the notion that struggling for the sake of struggling is a virtue.

it can distort romantic relationships tbh. If it is due to parents' gifts that you get on the ladder, I would think younger people would take parents' potential gifts into account when marrying. How would you know then if your husband/wife is marrying you for you when the stakes are so high i.e. basic financial security.

This is why I wanted DH and I to buy with our savings (albeit through living with his mum) though my dad did offer to buy us a house in east london with cash that we could live in rent free. It would probably have been in my dad's name and that would have meant DH has no security. If it had been in my name, it meant my father's money would have been at risk in the event of a divorce. At least when we bought with our joint savings, it is our earnings that we made in the course of the marriage so would be fair and square.

The comment made in the article about £350k not being a free ride is just plain ridiculous. Of course that's a free ride. That's an incredible amount to be gifted. I cannot stand it when wealthy people gift their children hundreds of thousands, but then say stupid things like that. I would have much more respect for them if they were just honest. I will never be able to help my children buy a property but I absolutely would if I had the means, however, I would at least be honest about how privileged they were.

I’d say getting that amount of money is highly unusual though. Most people who get help don’t get anywhere near £300k!

My parents helped us buy a house 10 years ago as we were renting and saving but house prices were rocketing up. Mind you we were getting a 95% mortgage due to saving our deposit with nationwide in a special account they did back then. So we didn’t need that much from them to get us over the line. We’d still saved ourselves and still had to earn enough to pay a mortgage etc.

My MIL always goes on about the help we had, then admits she had help buying get first house too. And with inflation and house price increases we probably got lent similar amounts really.

I don’t think people should be ashamed their parents helped them as long as it was the parents choice and didn’t leave them
short.

my worry is that the high earners without bank of mum and dad would be priced out of the expensive areas i.e. London/SE and they will flock to those areas where it is still possible for 2 civil servants to buy a starter home and then it would not be possible for people on more modest incomes to buy or even rent.

Your right op and I know this because I did this.

No help from bank of mum and dad but me and DH (fiancé at the time) put a deposit down that we had managed to save on a house worth £270k.

Me and DH joint income is just shy of £230k so we're eligible to borrow around the 900k mark but couldn't raise a big enough deposit to get a more expensive house. We could have pushed for 300k home but would not have had anything to decorate the house how we liked.

We couldn't raise a bigger deposit because of expensive rent we were both already paying and paying back student loans and debts we had occurred while trying to get through university and PHDS with no family financial support.

Now we have had children I haven't worked for years and don't need to because our house doesn't cost majority of our salary. The children get lovely holidays and we drive lovely cars. So technically we have stopped two hardworking civil servants getting a lovely and reasonably priced home.

When my children are all school age I will return to work and we may move on to a more expensive home but then that would make it more difficult for us to fund our children's future home deposits and then the cycle will continue

Personally, I married a man on an equal financial footing to me.

Financial disparities can be problematic in relationships, yes, but this is true whether it’s family money or the money you have earned yourself.

Families taking steps to protect their family money has been standard for a long, long time, incidentally.

I'm 48 and most of my friends and I were given money for a house deposit - about 10K but some more. Of course parents will help if they can, presumably if they see their DC are working hard and able to pay the mortgage.

I wouldn't be in a position to give that much at all and I agree it's unfair - but quite normal for parents to do this.

Me neither, but my friends and I were all buying around the millenium when you easily buy a London flat for less than £100k.

Wow! Do people stay living at home, or do they rent?

I don't think it's particularly a problem though. Rich people can afford to buy things that poorer people can't. There will always be someone richer than you and someone poorer than you.

These gifts/purchases will be subject to the usual IHT, CGT and stamp duty rules so as long as they are meeting their taxes I don't see why they shouldn't spend their money as they like. It's a free market.

I had no financial help and bought my first house alone ( mortgage) at 26yo. Got married and DH parents are penniless.
I and DH worked hard in the forces/ nursing to buy our house together with deposit from my first house.
We may inherit from my parents but I intend to gift house deposits to both DD and DS ( 18 and 16yo)
By the time my parents pass we will hopefully be mortgage free, both have various additional pension as well so financially ok.

We bought DC a flat at Uni. Eldest used this as a deposit for her next home.
Youngest, is about to rent out his student flat as he has a two year contract overseas.

Our friends sent their children to private schools. Our children went to the local primary and Secondary. Both went to Russell Group Unis.

We saved the equivalent of school fees (a rather basic prep and High school) into a fund. We also, added child benefit to the fund.

They are really appreciated that they were given help.

Yes, they have been given a start in life.
Many others are given a helping hand private schools or inheritance. Both had part time jobs at school and Uni.
They like their parents aren't extravagant or money orientated. They do work that helps people and society. I suppose the helping hand has meant they can work in NHS and Education.

We will be helping ours as part of inheritance tex planing. Cant afford to do it yet but that's the plan, and to put it in trust should they divorce. Everyone I know has helped their kids as sadly it's the only way, but I appreciate many can't.

I suspect most people do not have this type of deposit, however, most people I know who have bought in London received support from their family including myself. I would be doing the same for my children.

But it's not comparing apples with apples..
This couple likely have millions and are doing some estate/tax planning.
That's not applicable to 99% of families..
We scrapped together about £8k to help one of daughters get into a shared ownership property as she had rented
for 8 years and getting an ordinary mortgage to cover something suitable just wasn't going to happen.

Irrelevant tho

now its 65% of FTB. its not a minority anymore. some stats say 70%.

The issue isn't parents helping the DC on to the property market. Nor does doing so inflate property prices.

The issue is that property prices have risen to such an extreme that young people haven't got a hope without help.
The fact that a high percentage of young people have help is a symptom not a cause of grossly inflated property prices and stagnating wages.

The only way to resolve it is for property prices to fall significantly and for wages to increase. We need more housing built and a cap on foreign ownership of residential properties and second home ownership.