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.

But people never compete on the same market? Lawyers and people in finance can get way more than a nurse in the NHS. Should we stop those with more money buying properties because the lower income earners can't buy it?
It matters zilch where they get the money from?

"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."

Marry for money and you work every day of your life for it!

I live three miles from the city centre and the price of a two bedroom cottage flat in my area is around £195,000 move just a mile and a half from the city centre and a two bedroom flat owned by a family friend sold for £425,000 three years ago. Without a partner or family help most people would struggle to get on the housing ladder here. My DH grandmother died a few years ago and as his dad had died when he was seven months old he inherited half his grandmother’s estate. Without that and a leg up financially from my parents too I don’t know how we would have managed to buy property and so would likely have been stuck in a perpetual rent trap. Private rents here can easily be a minimum of £1000 a month and you cannot rent a 1 bedroom for less than £800.

I posted about this on another thread. I have lots of friends who are far wealthier than the salaries they earn due to huge injections of cash from their parents that funded university, weddings, first houses etc That was such an eye opener for me as I got to know more middle class folk - just so many wealthy people out there getting financial support from their parents. I grew up in a household where we lived hand to mouth and didn’t have much. My parents are retired now and eking out a frugal retirement. No money in the bank of mum and dad for me and my siblings and inheritance also very unlikely.

Post university, I studied in London, with a huge loan and three different part time jobs to stay afloat. Even the more’ normal’ of my friends were having that year entirely bank-rolled by their parents. They can afford a very different lifestyle to me, even now, despite our household income being in the top 10% or higher. We didn’t get parachuted into high earning jobs but have worked our way up. Servicing loans, saving, paying for everything ourselves has meant that we have a good but very ordinary lifestyle. Absolutely no complaints of course, I’m so grateful to live with financial stability but the wide gap remains between us and those who had a financial leg up.

How can you avaid stamp duty?

I absolutely intend to do this (my kids now in early 20s) -far better to spend the money now than leave it subject to inheritance tax later / especially with this governments intention to rinse every bit of tax out of people with any assets.

We didn’t get parachuted into high earning jobs
This is a massive problem at DH’s employer. It’s a large family owned business and the owner has parachuted in his four children as directors, all of whom are very low ability. The work is being done by the people under them while they potter about “being in charge” and earning more than the people who actually do the work. It leads to a lot of resentment.

just so many wealthy people out there getting financial support from their parents
It starts early. DH’s boss used to pay him overtime to do his son’s university assignments so he could actually pass! Then he bought him a massive house, paid for all sorts, even funded the setup of a business in his name, and the setup of another business in his wife’s name. Nobody can match that privilege with just hard work.

@Moireh the realisation that you can’t match privilege with hard work has been a hard life lesson. One of my wealthy friends described me as the hardest working person they knew. Another friend was slightly disparaging that I’d prioritized earning well in my decision making about my career. Easy for them to say, able to pursue what they enjoyed most having been bought a house. I have never been obsessed with money or status but I have been very focused on financial security for my family because my own childhood was very shaped by instability.

Even now, I don’t meet people at work whose mums worked as a cleaner like mine did.

He doesn't have a car, he lives in London and bikes to his jobs. He doesn't pay income tax as he doesn't earn enough.

He lives a very frugal existence which was made possible by his parents gifting him 300k so he just pays his food and heating bills.

He is a single guy. This kind of choices are only possible if parents help you out and it does mean you can totally opt out of the rat race as breaking his back working more isn't going to substantially improve his life as his base costs are covered.

Buy cheap doer upper with cash from parents and stamp duty is not payable on first 300k for first time buyers.

I couldn't do that as only had 58k in deposit (74 k in total in savings in our 20s) so had to buy a livable flat in London which does cost more. Cash only purchases are cheaper and if you have cash to do it up then I think you do spend less eventually

Income is taxed. My DH earns 66% more than me but in reality only gets 25% more (after student loan) In nett income .

We actually don't have a super high level of income inequality in the uk but we have a high level of wealth inequality.

My DH and I earn 121k combined (which is fairly modest) but we are apparently top 10% in the uk, top 30% in London, this is because we are a couple (a lot of higher earners may also be single or divorced which would work out in favour of the average earner if they are not). We can only borrow enough to buy a flat/pay childcare fees (if we weren't infertile) in most of 'naice' London (and an average semi in most of the uk but we will earn less in other parts plus have no real need for a bigger home due to infertility) so our above average incomes actually don't go very far. We have around £150k equity in our flat.

I bought without a cash gift in 2019 (just savings from living with inlaws and for 50% of that time we were on v low salaries beginning with 2 but i suppose had the benefit of being dual income) and I did buy in an area in nw london which isn't much cheaper than Denmark hill though it's a small 2 bed.

There is a ripple effect. People who get priced out of those areas go to other areas to buy and people who can't afford to buy rent.

The UK needs to build a shitload more housing, not be reduced to griping and infighting and arguing about who kicked who out of what area etc.

Build. More. Flats. (and houses)

He can only not pay stamp duty, mortgage, rent, or income tax due to parents gifting him money to buy his home outright.

There is no incentive to earn more? His base costs are covered.

Well the children featured in the article got university covered like I did plus 325k. Tbh my dad did want to buy me a 400k to 700k house in cash to live in rent free but I said no as I already had my mother in law's help with rent free living so didn't feel I needed it. Also felt it wasn't great for my dad to buy a house in london that he would probably leave empty once I bought my own place (which I did want to do and was close to doing) , wouldn't have sat well with me. He wasn't interested in residential renting as he is a commercial landlord and didn't want the faff of renters.

If I had that money there is no question that I would give it to my kids.

As the first post said, I think it's where you live. There's no way I could afford to live in the south on my wage.
However noth of my son's are buying house. Ds1 got his 3 new detached house when he was 24. The other son bought an older semi when he was 22. Neither of them went to university so they have no student debt. Me and their dad didn't help them out financially with deposit. We bought them a washing machine and dishwasher.
They are not unique. Most of their friends have done the same.
Neither lad is piled in debt. They have a 30 year mortgage that they are overpaying.

It's not grim up north at all.

It's called inheritance tax and tbh my civil servant friend does think they will clamp down on such gifts at some point.

There is vat on school fees now. Suppose the only thing rich families may be able to comfortably fund in the future is university fees but tbh the value of a university degree (in the uk) is actually not very high unless you went to Oxbridge or RG university and most people wouldn't earn enough to pay it back. So even if people get their degrees funded it may not actually translate to much financial benefit.

Free childcare is very valuable now but if we massively invest in childcare now the gap may shrink and it seems to be one of the few areas that actually has protected spending. People are also having fewer children. Also the childcare years are quite a short period maybe around 6 to 7 years for 2 kids in a lifetime.

Rent free living also valuable but also what you do with it is also dependent on earnings (which are taxed).

Of course parents help their children with house deposits if they have the financial resources. Why wouldn't you? However the amount quoted in this article is very high!

I think it's actually a great pity financial literacy isn't included in the school curriculum. It could certainly help people be more informed on this subject, although obviously I completely understand it still doesn't address the issue of parental help, but it would help them make the most of what they earn in the future.

We were both average earners in the public sector, but always had savings and a modest inheritance from my parents, who were also only average earners.

We have one child only, so yes, she's had a lot of help. She didn't go to uni, but worked in a job with unsocial hours, so we paid her rent for a nice flat near her workplace at the time for her safety. Later on we paid for her car and wedding. Gifted £50k towards their house and have done two days child-care for our grandchild. We downshifted to a cheaper area to be near them before their child was born, so have just passed on those liquidated funds to them to make their life easier.

I guess I was influenced by my mother's attitude to money, being taught 'money is a tool to be used wisely'. But there's more to good parenting than just handing over money.

I think it's totally understandable that people help their kids when they have the means to but I am a bit gobsmacked at all the comments about how ok it is. Why on earth is widening the wealth gap and leaving more people with unstable housing or an unsecure thing ok? 🤷‍♀️ I guess that explains why we had a Tory government for so long!
Like I said, I'd do it myself hypocritically if I had the means to (don't come from a wealthy family, neither does DH and we didn't have any help with our house although we did grow up in Scotland so no tuition fees). But I wouldn't pretend I couldn't see how damaging and unfair it is to society as a whole.

I think this will prove a mistake.

Better to encourage your young to leave the UK and pursue their career and life elsewhere.

Those funds given for property will be taxed to the nth degree in the UK - ultimately.

In London it's been like this for decades. Anyone I knew who bought a flat in the 2000s did it with family help. A bigger deposit, free rent while they saved, loads of ways they got help.
None of that was a option for me, and endlessly rising house prices in England means that more people are in the same situation now.

Unaffordable housing is a problem in its own right.

Unequal access to home ownership has been an issue since home ownership was an option.

The inequality is graduated from having a home bought for you/given to you, being gifted a deposit, being able to live rent free/subsidised rent in the parents home to save a deposit, to not having any assistance at all.

Home ownership hold different significance for Brits than some other countries, which impacts on the rental market. We have the worst of both worlds, unaffordable housing and shit rental options.

Something needs to be done as the health and wellbeing of humans correlates significantly with security and quality of our homes.

Helping the next generation is normal in our family.

I think the massive gifts of deposits and homes will also impact on (or needs to bring a change to) legal agreements.

Labour has mooted bringing in laws to give property rights to co-habiting partners who live in their partner's property once a set time has past.

I think lots of parents who subsidise their children's home ownership do so because having a roof over their heads is seen as a priority. They are unlikely to want that roof to have to be sold to give half the proceeds to a partner/spouse they separate from.