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.

@Gummybear23 If there’s not an attractive return to private landlords, they sell. If the amount of rental property reduces, as it would, it becomes scarce. Ok, price fixing solves the price, but not the supply. Lack of income for landlords means lack of investment in the properties. Larger landlords might remain and housing associations, but many others would invest where income is better. I already have. It’s a gamble renting houses with government intervention and we don’t like gambling with our investments to that extent!

Yes, I feel sorry for young people now as well. It's just not right that they can't have the life we had. Difference is, I don't think the bubble is going to burst unless we actively do something to burst it.

House price inflation over the last few decades has created a situation where property inheritance is now a huge divide in society.

I earn a decent 6 figure salary yet have far fewer assets than some friends who despite never having held down anything other than near minimum wage jobs have accumulated wealth by inheriting several properties in some cases from distant relatives they barely knew. Good luck to them but a society where inheritance is a bigger factor in determining your standard of living than work does not feel particularly healthy to me.

In some ways I have the same problem with my DS. I haven’t received a penny in help from DP or any other relative nor received any inheritance. My DP had me when they were young so I won’t inherit from them until I’m relatively old myself, possibly retired.

I didn’t have my DS until I was well into my 40’s. That means he will likely inherit from me at a relatively young age certainly well before retirement age. He is an only child and also the beneficiary of other wills as siblings don’t have their own DC.

He will end up with several million in assets probably at a younger age than I was when he was born.

It feels a little weird to me that a quirk of circumstance will make him extremely wealthy. He’s too young to realise this yet but the penny will drop eventually. I worry that he’ll then think he can coast through life with no purpose or worse still will inherit it all in his 20’s which I think would be ruinous for many people. It definitely would have been for me!

We benefited from Bank of Mum and Dad (not in London though) who leant us the money to buy our house outright. We paid them back with interest for years but at about halfway through they refused to take any more.

We hope to help our children a lot on the future too, although there are more of them so it won't be to the same degree at all. I haven't told our children we will help as anything could happen and I don't want them not to strive for themselves

I know an otherwise lovely guy who told me he had never paid income tax, stamp duty, mortgage or rent in his life. He lives in london z4 in his own 1 bed house which he bought as a doer upper. He is a gardener.

I do think a danger is how do you sustain the wealth through the generations if gifting is going to be common. You can help your child but what about the grandchildren... in the end unless you are extremely wealth, the money will be eroded if the next generation doesn't earn well (which would be the natural result if they feel no incentive to work).

Nothing wrong with Forest Hill! Had a flat there for 10 years!

I worry about my children in the current situation. They work full time, my daughter works for NHS, yet they can’t afford to rent even a studio in my area. There is no money to inherit. I didn’t, my children won’t. I’ve been a single parent for past 13 years, I haven’t had the money to save. They are all pretty much doomed to work for nothing if they can’t start their own lives or afford a family.

@KatieL5 There are such things as Trusts for inheritance. The people you are talking about need estate planning advice. Plus they might need a lot for their own care and IHT can eat up a lot. Probably more when Labour pounce.

I know an otherwise lovely guy who told me he had never paid income tax,

No idea how that is possible, but....

Not so lovely then eh? He's a thief of the public purse which is what taxes go towards.

As a gardener, I bet he has a car to get to jobs so uses the roads, (which need maintaining). maybe has an occasional - chronic as he gets older, being in a job like that - need to use the NHS......

Nah, wouldn't employ someone like that or be friends with one who is an "I'm alright Jack" type. Utterly selfish. Probably married/partnered up too, kids at school? All free, eh?

No. Taxes will just rise and rise.

Anyway, sorry for derailing the thread.

The financialisation of housing even impacts the dating market. How can you risk marriage if the prospective partner doesn’t have similar wealth? It feels like we are in a Jane Austen novel where inheritance determines life chances.

I love it when people draw the line of what is “alot of help” and someone unfair just above the level they themselves got!

@Captcha4903 You get a pre nup and ring fence the deposit if one is large and the other isn’t. Madness nit to. These have less influence as the years go by but if it’s a short marriage the intention of how money will be split is clear.

There are many bigger issues influencing house prices, like how much a bank will lend and on what interest rate; the buying of British domestic housing stock by Chinese and Canadian pension funds; inflation… The amount mentioned in this article is unusual. Most familial gifts towards house deposits are five figures, not six.

What is your alternative? Preventing people giving their own money to their own kids? That would result in a dystopian level of interference in the private lives of everyone and would likely fail.

Around us house prices appear to be down about 25% on 2 years ago and very little is selling, even at reduced prices.

This is not a new issue. It’s nearly 20 years since house prices shot up. 20 years that young professional people have been unable to afford houses. The age of FTB has gone up and up, and mortgages have got longer. I was 30 before I could afford to buy a house, and even then it was on a 40 year mortgage with a deposit provided by parents. So I’ll never be able to climb the ladder because it’ll take me my whole life just to pay off my “starter home”.

In fact I don’t know anyone who has been able to buy without receiving a deposit from the older generation. It’s sickening when you work just as hard as other people your age but still can’t ever get a house because your family doesn’t have a chunk of cash to hand to you.

There are still places where houses are under 100k, but they’re in areas with low salaries, fewer available jobs and a long commute to work. My house is worth about 300k but in London it would be worth a couple of million. My previous employer had a London branch and my colleagues were amazed when they saw photos of my house.

London already pretty much is a inheritocracy, if your parents can help you is more important that your income for most. I don’t have any peers who have bought without help either cash gift &/or living at home rent free.

The area we bought our flat in under went massive gentrification & we sold to a parent buying it for their dc, it was the 4th flat that yr to go in a similar fashion. The new residents are much younger & wealthier so demographics have changed quite a bit. Some of the price growths are so insane though that it’s impossible to do it without significant help unless you got on the ladder yrs ago. One of my colleagues is selling their house for approx 500k more than they paid for it 12 ish yrs ago.

What on earth does this have to do with gifting?

It isn’t particularly progressive for society & something has gone wrong where younger people aren’t having dc, less disposable income, stagnant wages etc.

My friend actually divorced her husband less than a year after marrying him, for this exact reason. He was an actor who worked in a cafe between jobs - but he did have a computing degree. He promised her he’d give up on acting and get a computing job after they got married, so they could afford a house and she could take a step back from work to have kids. When he didn’t get a computing job and continued auditioning for acting work, she filed for divorce. She said “I thought we wanted the same things but obviously we don’t”.

Shortly afterwards she got remarried to a guy who had a management job and 250k from his parents to buy a house. She had initially rejected his advances because she said he was short and unattractive - then she found out about his assets and changed her mind. She’s currently enjoying living in a house worth over half a million pounds and holidaying for free at his parents’ cottage in the Cotswolds.

He’s not particularly attractive. I would have happily stayed poor and enjoyed fucking the actor - but each to their own! I suppose this sort of thing has gone on for centuries?

We have been able to help one child who lives in a low cost area and could buy a 3 bed semi for less than £200k. She was earning enough for a mortgage but needed a deposit. We had to extend our own mortgage but it was a sensible investment decision. Our other child lives in a high cost area and though he earns more will need a substantial deposit if he will ever be able to buy. (sort of in line with the people in the article.) We can't afford this. On one level it's a pity to help one not the other, but equally the help the other would need is so much more, that too would be unfair.

It’s not just FTB quite a few of my old neighbours/school mum friends had significant help to move up the ladder & then some have had additional help with school fees. We moved to a cheaper part as that was the only way of affording a house.

Without help young people and young families would probably be priced out of places like london. I’m intending to help my DD onto the ladder, the house prices are a reflection of supply, it doesn’t really matter who buys them it’s just that house building hasn’t kept up with population growth. I think life is tougher for each coming generation. They are going to be putting in more and getting less out.

Exactly. Just like your parents did, Op. Or is it ok to receive financial help from parents for certain things but not for others?

The children of those being lent £20k will not be buying flats in West Hampstead or Denmark Hill, presumably.

Having 4 kids, sadly they aren't getting much from me until I kaput! Two have bought a flat together. That seems to be a common way of getting around the deposit, income/ratio bank questions. It's worked well. They went from living with mum and dad and 2 siblings to living together.
It totally sucks though , for the average earner. Sydney ( Australia ) prices are ridiculous.
Their place is over 10km from the city. 2 tiny bedrooms and no parking and cost the equivalent of 350k GBP 3 years ago.

I'll help my kids if I can. I'd also be open to them building something on my garden potentially if that worked better, and the house is big enough that they'll be able to live here as long as they want (as long as they are reasonable with their behaviour/pull their weight, and don't mind living rurally)

I had help with a deposit when I bought my house 20 years ago, or I wouldn't have been able to buy (prices were rising and I wouldn't have been able to afford my house a year later) - BUT - there was no room for me to ever move back home after I moved out at 18, and there will be no inheritance from anywhere.

Why wouldn't you help your kids if you can? Life is unfair, some people have more money than others by luck or by effort. It's always going to be that way.