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

[floral2027]

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.

I suspect a lot of people with adult children have made that kind of wealth through property values increasing.

My DC will get help. 2 from their father - maybe to the tune of 325k each from inheritance - but his mother is still very much alive and well and could be for 20 odd more years. No care home fee’s (the family would never due to cultural reasons). They are very lucky.

I am 47 and haven’t even started my mortgage yet due to living in the South east until my DC are all at Uni (2yrs). I have an older son who is already 30. He lives with his grandma still (my mum). He doesn’t know it yet but I am going to give him my share of that house (assuming care home costs don’t eat it up) as although he lives in a cheap area, he hasn’t got anyone to give him a large deposit. So I won’t benefit from any inheritance but I do have a decent salary (68k) which whilst not great for the South east, will be for the north west. I’m also fortunate to have a civil service pension so if I make it to retirement age, any mortgage I have remaining I’ll pay off with that.

I don’t think my parents generation really buy into bank of mum & dad. My dad has passed now and my mum has some savings, but isn’t wanting to pass on right now, which is absolutely fine. It’s certainly nothing to the tune of 325, but would help her two DC who live in flats to buy a house. But we would never ask for it. My mum always offers to loan us money for housing, but with high rates neither my brother or I are willing to do that. Again, perfectly fine. It’s her money. But I will be sharing with my DC.

I agree with you OP. There was a thread about a month ago where similar was discussed

I absolutely understand the desire to help younger generations and anyone with the means will of course do so and I will top if I am in that position.

But as a society its a complete disaster of a situation and will only get worse. House prices will continue to be pushed up by those receiving help to keep up and the cycle will continue. We've seen it happen in London but it's also becoming apparent in other places too.

The baby boomers are set to leave ££££ to their off spring. Anyone who doesn't receive inheritance will get left behind - no amount of working hard at school and earning a relatively decent wage is going to make much difference if the next person has a 250k deposit.

I understand we all want the best for our own families but we've essentially created a world where life style comes down to whether your parents bought a house at the right time. Not a criticism, like I say, I'll no doubt do it too to ensure mine aren't left behind so the cycle will go on

"dipping into their investment portfolio" an option for about 1-2% of the population, but boy the impact it has on the rest of us. Property is a massive pyramid scheme yet to collapse.

YANBU that the bank of mum and dad will only entrench inequality between the haves and have nots. But YABU to think this is any more than a reaction to the real problem- spiralling house price and rent inflation due to an artificially created and perpetuated housing crisis.

The mums and dads who are able will certainly help their kids. It’s the decision of successive governments from Thatcher onwards that have created the housing affordability crisis.

Mums and dads gifting funds doesn’t inflate the prices.

So you think parents need to stop helping their children as it’s not fair on those who can’t? That’s life I’m afraid. It’s the same accross the board -some parents buy their 18 year olds cars, pay for their holidays, take them for fancy meals, pay for weddings etc,etc, etc. People in life aren’t equal - there’s always been haves and have nots, and those in between. .

I imagine there's a bit of tax planning involved there too.

As long as M&D stay alive for the next 7 years, it will help avoid/reduce a hefty IHT bill.

I'd do the same if I was in their position.

@floral2027 I’m not really sure what your point is. You don’t object to parents helping their children (since you had financial help yourself) but you object to people being helped too much? What is the cut off point then?

And I think you’re confusing cause and effect - parents helping children onto the housing ladder is not the cause of rising house prices, it is one effect of rising house prices. Income and wealth inequality are increasing and that is a huge issue but, what, telling people that cannot give their children money (or above a certain amount of money) to buy their first house is not really going to address the root cause of that. But I don’t sense that you care about that, you’re just jealous and think it’s unfair (lots of things are unfair…).

If they start building more houses then maybe prices won't go up so much.

I have been fortunate enough to be able to help my kids out but I am very aware of how lucky they are, and I didn't have any help.

We are helping our DC not through inheritance but through money earned in a profession. We have been given no handouts but live frugally and are using pension/lump sums to help.

We managed to get on the property ladder early and our house doubled in value over 18 months which enabled us to move up the ladder.

I feel it is important to pass this on to my DC they have it so much harder. Rents are ridiculous.

I am not saying they shouldn't give their kids money. I am just pondering the effects on our society, that it may mean that lots of young people lose their motivation. Cos what is the point when you are priced out of a decent home (in the absence of social housing) from the start.

In my home country, 85% of people buy flats from the government. It is not very common to help your kids to buy property even if you have the money, though living rent free with parents is common.

I do think the high prices are caused by wealth inequality and wealth being so huge within a segment of the population that the median london first time buyer is gifted 70k. People can only give what they can afford and for some parents they can now afford to give super huge sums. Eventually what would happen as gifts become de rigeur in the middle class is that 50k or 70k wouldn't be enough, it would be the equivalent of giving 5k or 7k.. so I expect even people with gifted deposits (but normal parents) will be priced out very soon.

We should be able to do something similar for ds when we retire and downsize. I very much want to. I don't see the problem. Its my money, my child. What's the point in waiting until we die before we can help him? He's an only child, we're older parents - nothing would make me happier than to know he has his own home before we shuffle off this mortal coil.

I do wonder what the future holds. I am lucky as I bought in the north east 10 years ago on my own. But back then it was very cheap and I lived in a shithole for years prior while I saved. I’ve no idea how people manage it now.

When no one can afford to buy in London without parental help they will move further out and drive up house prices elsewhere.

Where will the people from “elsewhere” go ?

I don't know if anyone in my kids age group either that gets this 20s and 30s.

If everyone does that, would what you give be enough esp if you aren't a property millionaire..

What kind of society would we live in when your parents property wealth determines your access to secure housing (given scarcity of council housing).

What do the men who are excluded from this, what do they have to lose. Wages are shit, the lower income men can't afford to rent as the high income men without parental help rent. This will drive men to extremism and misogyny.

It must be a generation thing. I got no help financially from my very working class parents as they didn't have any. I am the same with DS. Very few of my friends received financial help and those that did it was very little in today's terms

Oh well that all got a bit fucking silly and only three pages in…

You OK hun?

My DS will get our house only when we've snuffed it and if we don't need care home fees. We've sod all savings.

So he'll have to fund his own university years and housing 'till then. 🤷🏻‍♀️

I don't really mix in the sort of circles that the OP's referring to, but I do know a lot of farming families who have additional properties built on their farmland to house adult offspring. However, I feel sorry for the oldest sons who are expected to carry on farming regardless of their own interests.

Do we all need to understand whether another person has more than we do ourselves in order to establish a moral judgement over what the other person does or doesn't do - is there a scale somewhere - does identity trump this in the moral gymnastics world cup? Or any of the 'ists and 'isms?

As I enter my 30s , I have been pondering this as we are the only ones in my husband's generation on his dad's side to own property. 8 grandchildren.

They are all aged 26 to 35. Only 3 live outside the family home. We ironically live in the most expensive area. His grandpa bought a semi in London in 1955 as a garment worker and his parents also bought in London in modest jobs.

I can already see the effect on the male members of his family, they feel frustrated and emasculated. One is living with his mother at 35, with a toddler and wife in tow, unable to access professional employment as his mum lives in an area without many job opportunities so he has to work commission only sales roles. Another guy has severe mental health problems.

What we are seeing is an explosion of economic inactivity and mental health problems in Gen Z.

'In Spain alone, over half a million 15-to-24-year-olds are neither studying nor working. Meanwhile in the U.K., almost three million Gen Zers are now classed as economically inactive—with 384,000 youngsters joining the “workless” class since the Covid pandemic.
The studies don’t delve into what’s inspiring young people to ditch the rat race and opt for a life under their parent’s roof or on public subsidies, but separate research highlights that even if they did start climbing the corporate ladder, buying a home of their own still feels like an impossible task.'

If lots of men opt out of adulthood and spend all their time online, it is probably a matter of time before they become an easy target of the likes of andrew tate/farage etc.

well exactly. The basic premise, that lots of people are getting money from parents in order to be able to afford to buy, is one thing, but then they deliberately find the most extreme example to get views. 'I gave my kids £500' doesn't prompt as much debate, does it.

In this case, the son would never have been "stuck" renting forever - with his and his partner's salary they probably could have afforded to buy in many places outside London (or even outside the desirable area they wanted to live in), had they wanted to. Also even if the parents hadn't given them that money now, presumably he and his sister would have inherited whatever was left of it after inheritance tax and, if needed, care fees upon their death anyway.

Which makes the 'it's not fair' argument moot.
It's NOT fair that those with generational wealth and generous parents get a leg up on the housing ladder, but if they didn't, whether it was morally frowned upon or banks tightened up their mortgage criteria even more or whatever, eventually the same people would get an inheritance anyway, and those whose parents couldn't afford to give them a spare £325k when they were 28 would be unlikely to be leaving them £325k when they are 50. Unless we start calling each other comrade, most people are going to want to help their kids out where they can.

I suppose the only light at the end of the tunnel is that I doubt house prices are going to increase as drastically again (more than 10/20x in 30 years in some places) - because wages have stagnated so much. It would be impossible for there to be enough people earning well enough to afford todays 1.2 million house if it became 2050s 18million house in central London, or even if todays £300k house in the outskirts of Hull becomes 2050s £4.5million. With that and the birth rate falling at some point things will probably even out a bit, but it will never be completely fair, because life isn't completely fair!

Interesting thread. We'll be giving our dcs £80-100k each. Only able to do that because we're older parents and inherited a total over £500k from our own parents.
Am acutely conscious that this is very unfair but we aren't going to not help our dcs because others don't get this sort of help.

if your family members are 26 to 35 though, most of them aren't Gen Z but Gen Y/Millennials.

Not being pedantic but just to illustrate there's quite a big gap in potential lifestyles between the oldest and youngest of a generation, let alone between generations. Take millennials - born 1996 so the youngest will be approx 28 now, and the oldest born 1980 - so would be 44. Tuition fees went from nothing, to £3k p/y, to over £9k within that time, for one example. Whether you graduated pre- or post-2008 recession would have had a huge impact on your career and earning potential. If you were 28 and wanting to buy a house today, average house price is £260,000 today, whereas it would have been £156,000 when the oldest millennials were the same age as you. etc....