Buying a flat for our daughter

[Motnight]

We are in our late 50s. Still working, me full time, DH part time (health issues). We recently came into an inheritance which was unexpected. As a result we are mortgage and debt free and have savings.

Our DD is in her mid 20s. Works in the NHS. She will never be able to afford to buy any property in London where we live. She currently rents a room in a shared flat. She is saving but tiny amounts as her salary is around £28 000. She has a small life time ISA.

We are considering buying her a flat, that she will own outright. It's very early days so haven't thought things through. What do we need to be considering? Could we buy the flat for DD but her pay us rent (much reduced from market value)? Would we have to gift DD the money so she buys the flat in order for her to use her ISA?

DD loves London, has her job, friends, family, partner here. She doesn't want to move away from it! So if we buy her a flat it would have to be in London.

Any thoughts please about what we need to consider? Thank you.

Two years ago I bought a flat which is in my name and I rent it to my DC for 40% of the market rent. I will transfer it to his name in a couple of years time.

I had to pay second home stamp duty.

It makes sense to give her the money to buy it in her name.

If you buy it in your name:
you will pay second home SDLT, where she will pay none as a FTB.
She won’t get her LISA bonus
The flat will be subject to Capital Gains Tax when sold, as not your primary residence
And will be subject to IHT when she eventually inherits, if your house, the flat and your other assets combined are over the threshold. Highly likely if your own home is also in London.

Very happy to see an NHS worker helped to stay in London.

Not quite that simple but worth thinking about.

If her future spouse earns more, has their own assets , they sign a prenup, s/he may not be entitled to half the flat. It all depends.

I would also have a conversation at some point with her regarding protecting her share of property / deposit should she meet some one. I've had a friend who was given a large deposit by her parents for her house and now he ex husband is after a share of the deposit because she didn't protect her assets