London areas

[AmbroseM]

As a non-Londoner and empty nester, looking to downsize and use some of the proceeds to buy DS a place in his name in the next 6-12 months in London that's safe (well relatively speaking), near the river and green spaces. Am thinking Putney, Wandsworth, Twickenham Teddington etc. No idea where he'll actually settle /end up working as he's still at uni so it might end up being a long term BTL
Investment (5 + years) if he decides to live/work elsewhere /go overseas but figured London would be a good bet for job prospects etc. Any recommendations on areas based on a budget of up to 750k (cash) (based on property being in good condition or 600k for a fixer upper) ? Prefer freehold terrace or semi but there are slim pickings for those within that budget (looking for 3 bed+) and I don't know adjacent areas well enough or whether prices are on the up or down and it's even a good time to buy. I've never bought leasehold so a bit wary and have no idea re: how much extending a lease would cost.

This is really kind of you. There are a few issues you might want to think about-
— the areas you’re looking at are all pretty far west so potentially even if your son ends up working in London he might have a long commute (Twickenham to the City, say, is well over an hour).
-if it’s initially going to be a BTL your son will need to be on top of the obligations that come with that and the rules around no fault evictions if he wants to move in himself.
-Taking account of the above, there’s an argument for saving/investing the money ready for him to buy at a later date. I understand the urge to buy now especially if you’re worried about house prices outpacing equities/cash, but there’s also some downside- it’s much harder to make money on a BTL than it used to be. It would be worth thinking about all this taking account of potential costs such as moving costs if he ends up wanting to live somewhere else.
-If you do want to buy now, I’d probably look at period conversions with share of freehold. In the areas you mention, I think you’ll have limited choice at your budget if you want a freehold house.

That's a tough ask on that budget in those areas to be honest. Certainly for a house. As for the idea - sound enough prices will just go up and faster than earnings.
You're looking at a two, possibly three bed flat in Putney. I know less about Twickenham but it's not a cheap area by any means.

Thank you for the considered response ..its sensible advice as I'm having the same concern so useful to it echoed re the BTL .. it looks like it may be a headache and not be a great ROI for investment given the Renters Bill. As for being kind, I'm a single professional parent whose managed to build up a decent pension pot and planning on retiring in the next few years and so it feels negligent not to gift it from an estate planning perspective given the low IHT threshold for single parents and 7 year gifting rule. In fact it will be quite a relief for me to gift it. Downside he has no idea how to handle money or tax filings or where he wants to live. Indeed he may be better off waiting on house buying especially if the housing market looks soft for a year or two because BTL landlords are selling. I'll try to advise him and hope he' ll be sensible and park it somewhere safe that earns a bit of return (to negate inflation) until he does decide to buy. I was simply thinking London because of job prospects.

£750k would get you a nice Victorian terraced three bed in Isleworth, West London. Possibly doable in Twickenham but more of a stretch (and further out).

Yes from what I can glean none of those areas yield much by way of houses at that budget from what I can see on Right Move so may need to compromise on a flat vs a terrace or semi. I read conflicting things about the housing market forecasts for 2025 but I'm sure certain areas won't soften too much even if a lot of BTL landlords sell up.

Don't go the BTL route..

£750,000 is a lot of money to give a young person just out of uni, a bad relationships and half of it could be gone (happened to a friend of mine).

It is common, if you are gifting a substantial sum of money, for it to go into a trust, with the beneficiary being your son. The trust then makes a loan to your son to buy a property and then in the event of a separation etc the trust can recall the loan and the money isn’t lost. Depending on the trust type the transfer may be a CLT for inheritance tax. If your son isn’t ready to buy a property the trust could hold investments but there will be tax payable and if it is a discretionary trust it will be at the additional rates. Personally I’d get some advice on the best investment/how to structure it.

I do worry that DS does not appreciate the value of money or would learn seriously about financial investment and if he did get married and divorced, pre-nups even if he had one, are not binding in the UK so yes there always that risk. N the other hand, I'd rather give it to him then leave it too late and it goes to HMRC if I pop my clogs in the next 7 years. The estate issue is exacerbated by 2 things: 1) HMRC get a sizable chunk already as threshold for single parents is only 500k (counting real estate - easy to exceed for anyone with a house in the South East) then the rest is taxed at 40 per cent and 2) with the latest budget changes in October overnight my estate will now include my pension pot ..hugely impact to the IHT liability so that's really made me think hard about estate planning whereas I'd been rather complacent about it before.

I don't really have anyone close enough to me to trust to be a trustee of a such a sizeable amount other than my mother who is too old to have the capacity to deal with it. (I'm also going to be redirecting any inheritance from her to my DS again for estate planning purposes as I won't need it and don't want to add further to my estate).

It's a first world problem I know, and and what I have has all been accumulated from a lifetime of being a professional PAYE wage slave but death and taxes as we know are inevitable .. it seems selfish not to try to mitigate the IHT tax risks legally to some degree before it's too late while keeping enough for myself and you never know what the next budget will restrict further.

I am rapidly going off the BTL idea for DS as the more I read about it as it won't be a liquid investment and the ROI is unpredictable given the seeming increased liabilities and risks and work involved. Also far from clear if there will be much real property value appreciation there in the next 2/3 years. So many rumours of the housing market flatlining because of the BTL market imploding but who knows. I've never done a BTL so not something I have any experience in. The 3 or 4 landlords I know who have them seem to be seeking to get out of the market.

Blushing at my typos but being new to MN haven't figured out how to edit once posted!

Look at the Elizabeth line perhaps and along that route? Budget would go further in Greenwich/Blackheath & still only be 30 min commute prob less

Even if he does move to London after uni he’s unlikely to want to live so far out as a new young professional. If he has all this money to come regardless why not let him fend for himself and rent for a while so he does learn the value of money and invest it in the meantime?

You can give him the money on trust with a solicitor or similar as trustee, set up in savings and investments taking into account your thinking that he might use the money to buy property in approx 5 -7 years. You can set it up so that there is a right to use the capital for property purchases having the absolute right to the trust if he reaches eg 30. All quite simple.

He needs to be aware of the stamp duty impact for him as a first time buyer if the house is put in his name. This will impact him should he look to buy with a partner or friend in the future.

Yes fending for himself is a philosophy I would deeply subscribe to and ideally l would not be going this for a few more years until
He was about 30 as I'm all for learning what a hard earned dollar means and having a work ethic not for making money but for your own job satisfaction whatever you decide to do (whether you work as zoo keeper, a nurse or as a lawyer) but I feel I have to make the gift soon to keep it out of my estate IHT wise and then make sure I survive for 7 years - of course I'm planning to be around for much longer but you never know :-).

Agree renting and investing seems sensible til he decides where he wants to settle (he may even decide to go overseas or do a post grad somewhere - wish he had more of an idea of his plans but he really doesn't).

Thank you for the advice though .. I think if buying in London I will need to focus on a shorter commute area - somewhere like Clapham Junction perhaps but at best it seems you can get 2 bed flats with one bath at that price .. was thinking many jobs are hybrid these days so even if one worked in central London the commute may just be 3 days a week. He's visited but never lived in London though has friends at uni there but he had no particular views about whether to live there or not or which area.

I was coming to suggest exactly what @AlecMills has suggested. That sounds the most sensible option in the circumstances. A family member has a similar trust arranged for them.

Yes understand the stamp duty impact especially if increased stamp duty if bought as a BTL but good point as it affects the BTL ROI point.

Thank you everyone for your advice ..most helpful .. think I'll need to get some professional advice on the trust idea and also what tax implications that involves.

Twickenham is barely even in London. It's nearer to Surrey. I'd say those areas are all too expensive for your budget as well.
The most affordable place in London is Croydon. It's transport links are much better than that of Twickenham etc. though obviously not central, it's easier to get to the city.

Honestly OP those areas are lovely but definitely somewhere you would move out to after marriage and kids, in your late 30s or older.

If your DS hasn’t even graduated yet, doesn’t live in London currently, and may not even want to live in London after graduation, these all seems very previous. In 2-3 years’ time hems have graduated and will have a job, and will have a much better idea of where in the country he wants to live.

Bromley

Yes .. I think I've reached the conclusion he should wait to buy property til he's landed where he wants to be long termish. It's a nice idea to put a secure roof over their head and I'm lucky that am in a position not be able to even consider it but perhaps it would be a rash decision as not the best investment if he decides to live elsewhere in the UK or abroad and if he does end up with a steady job in London he can always supplement purchase price for first purchase with a mortgage and maybe get something in safe area though nothing fancy. Thanks all for the food for thought.

Sorry .."to be able to be in a position to even consider it" ..Damn I need to figure out the edit function.

It sounds like you are going off the idea but I wanted to say Clapham/balham and along the northern line is probably better location. You get less for your money but it’s reasonably likely to be where he wants to live after graduating. I wouldn’t worry about it being a big place as it’ll hold its value - maybe aim for a Victorian conversion 2 bed flat?

I'll still buy property if he actually decides soon that he wants to settle down in London but yes was considering those areas as well. He's very into rowing and would like to continue post uni (though not sure how feasible that would be to continue with the pressures of a full time job) ..hence interest in being within cycling distance of a river and decent rowing clubs given the early hours involved.

Have you actually discussed it with him? Would suggest you do that asap as he may have plans already, and knowing this money is coming his way will help him think about the future. You don’t need to talk exact amounts if you don’t feel ready- “enough for a flat in London” is enough info to help him plan.

(Have been through similar with my own DS- we are planning to give him approx £400k for a deposit. He had no idea and had been thinking about the future on the basis that London flat ownership would be out of reach- he grew up in London and would rather stay if possible.)