Buying an adult child a house outright: long-term impact?

[Cozylittlecottage]

Have you done this or know anyone who has bought their adult child a house outright when they left uni or were in their 20s?

What impact did it have on their career/life choices and how are they getting on in life now?

Has it impacted their decision to get married?

I'm not a journalist ☺️ We're actually in the process of making plans to do this and I'm curious how it worked out long term. Did it sap them of career ambition or did it give them more confidence to pursue what they were interested in.

Just interested in the experiences of others who have done this. Thanks 😊

Essentially this is what happened to me. My parents bought me a house when I was 20 about to start my second year at university (medical degree- so they knew I would be there for at least another 4 years). In the end I stayed on after university in that city until I was 30 so lived in that house for free (except bills of course) for 10 years -when I left it was sold and the money went back to my dad, I don't think he made that much profit on it overall but then he didn't have to help me pay rent for those 10 years either!!

All it left me with was huge gratitude to my parents for their help. I've got an incredible work ethic and work really hard (to be fair as a doctor in the NHS you have very little other choice!!) and I'm super sensible/careful with money (much more so than my husband who never had any help like this from his family!)

That's an amazing outcome 🙌

Thanks 😊

I know two people who have had this. Both, I'm sorry to tell you, were insufferable brats.

The first was a former housemate of mine from when I was 20-21.

His parents told him when he was 18 or so that they would buy him a flat outright, although they didn't specify when. While I was living with him he found a place he wanted, and approached his parents, who apparently felt it was a bit cheeky for him to say "I'd like my flat now please" so they said they'd make him wait a couple of years. I think they thought if he had to wait for it he'd feel less entitled. It did not work, unfortunately.

While I was living with him he worked as little as possible, making literally the bare minimum required to pay his rent. He did ok at school but had no plans to do anything else, and wasn't interested in uni. He thought of himself as some sort of artistic spirit, and told people he was a photographer. It is true that he owned a really nice camera (which his parents bought him) and wandered around London barefoot (seriously) taking pictures which I think he thought were very arty and interesting, but were actually a bit shit. He never made any money from photography. A couple of years later his parents bought him a flat outright in Islington. He immediately rented out the spare room and the living room, used that money as his income, and went on being an "artist". He then decided he wanted to be an actor. Went to a few acting classes and joined the worst improv group I have ever seen in my life. Did a couple of student films. Got bored with it. Now mostly spends his time updating his word salad "artist" website and chatting up the poor unsuspecting women of north London, telling them how photogenic they are and pretending he used to do Shakespeare. I've known him for 20 years now and he has never, to my knowledge, had a proper job.

The second was the heir to the family business. Before buying him a house (!) his parents paid for his rent, bought him a brand new car, and paid for his petrol. This was because he was living in London and they thought, well, London is so expensive, this will give you some freedom. The freedom it actually bought him was to sit around and play X-Box all day - and I really do mean ALL day. He would demand things from his parents and was unpleasantly mocking to his mother, who (having retired early from a career in the NHS) was always dropping everything to do whatever he wanted, ferry him around, buy him xyz. If on the rare occasion she said no, he would laugh in her face and say "Be serious, what else are you doing? You don't have a life!"

His parents created a "job" within the family business which required him to be in the office one day a week, to ease him into it. Since the role was created for him and wasn't really outlined (or necessary), he mostly scrolled Facebook and watched YouTube.

He got married after a whirlwind romance, and his parents bought them a three bedroom house with a garden, outright, in his hometown. Shortly after this, he took over the family business. Shortly after that, 90% of the staff - who had been there for decades - quit, because he was treating everyone so badly. It's the kind of business that will always be in demand, so it probably won't ever go under, which is almost a shame because frankly he deserves to fail.

The standout detail with the above examples is that both knew from an early age that their futures were sorted and they didn't have to work. Despite these cautionary tales, I do actually think this is a wonderful thing to be able to do for your children. But I don't think it's wise to do it straight away. I think a bit of struggle in your 20's really gives you some drive, a strong work ethic, some perspective of the world and how hard life can be, and a genuine appreciation of such a generous gift when it does come along.

If it were me, I'd wait until they were closer to 30 than to 20. Let them live in grimy flatshares and have to go round Tesco with a calculator for a bit. Don't tell them what you're planning for them. Honestly, it's character building.

You really said this to them? Is that how people with assets talk about marriage? You are giving them a strange set of values, first by buying them a house, second by saying marriage risks 50% of the asset you gave them. I wouldn’t want to marry into that personally. You’d be better to give them a deposit and stop coaching them on how to hang onto the family wealth.

We have gifted each of my DC a smallish flat. They have both remained hard working and earn very good salaries so I am very pleased about this.

However a friend of mine's children each inherited around 300k from a grandparent and neither works much as they live off the money. They are only in their late 20s so the money obviously won't last. It is sad to see.

Only you know what your DC are like.

I disagree.

More young adults need to be financially literate when it comes to marriage. It's a legal contract that needs to be entered into with full consideration.

That knowledge needs to cover a multitude of situations. That goes for young women not having the protection of marriage when they have children with a partner, or someone going into a second marriage with assets they have built up that they wish to protect for their existing children.

Our young adults need more knowledge not less when they are making decisions about marriage.

@poppymango
I could not agree with you more and your post reminds me of the family I know. The entitled one calls himself an entrepreneur, he had a 'business idea' that was absolutely shit but he managed to pretend it was working for about 8 years!

He knew he was going to get a property bought for him and his parents were still giving him an allowance when he was 30! All this meant was... he did nothing with his life. He actually had a brilliant opportunity open up to him during a work placement at Uni, but insisted he was never going to work for anyone. And never has!

@Cozylittlecottage I am sure you are thinking... well, my DCs will never be like that. I know, without fail, the parents of the boys I have talked about felt the same too.

It might well work, it might not.

Sounds good to me. As long as it's protected and they don't do something silly like get married to someone who has much less... (in this country spouse gets 50%). We're doing it for our kids when the time comes, or at least, helping them a lot.

Why would you give them a house so young, just to tell them they risk giving a huge chunk of their wealth away if they marry the wrong person, and that they’ll never get it back from you. What a head fuck for a young person. Just keep your money and let them live their own lives.

My point precisely. They will marry someone with far less. How many youngsters get a house bought for them.

I have known two people have this done for them as students and it went very differently for each one.
One was a massive pothead and remained a massive pothead, never really moving on from student life and doing bits of jobs to pay the bills
Two had a london flat purchased for them, got a 1st and immediately moved there after graduating to take up a grad scheme place with an oil company. Is now very high up in that industry.
I don’t think it was the property that made either of them behave the way they did, it was more education around assets/finances and the aspirations they were raised with

Not quite the same but we gifted our mid 20’s son a deposit of 40% and paid off his student loan. He was living with his partner at the time so we did need to have a discussion around protecting his asset - he lives in an (v expensive) European capital with different laws around living together than the UK.

if anything it has made him more driven and he is both v grateful for what we have given him and very conscious of his responsibilities. I think the personality/ ambition etc are already there in the person and in our case the gift we gave him has only made that more focussed.

We did chuckle though when he phone us shortly after moving in incredulous at the prices plumbers charge😂

We will do the same for his older sister when the time is right and she knows this. She is a different character to him but again I have no concerns about helping her in this way. If anything it will have an even bigger impact on her as she is a teacher who only works in schools in v deprived areas and will never earn huge amounts unlike her brother who works in banking/finance.

Dd’s friend has her own flat, bought by parents. She is very driven with head screwed on - I’m not entirely sure that all young adults are like this! So I think you have to know your own dcs.

Dsis paid for her ds and dil’s house. And yep, they are now getting divorced. She is only thankful that she didn’t go through with making her own house over to them as well, as she had started the process.

I think it's more to do with the character of your child and the way you've brought them up than assuming/worrying that this one act will have a lasting effect on how they live their life.

I went to uni with someone who was given a flat (and a car) by her parents while she was a student, like the previous poster. Her father had sold his business and was "setting his children up". She was and is a lovely, hard-working person and, professionally, went on to more success than her father.

I think when she sold the flat it was to buy a home with her then husband - she lived there for quite a few years after she graduated.

The house isn't an issue - it's the attitude of the person being bought a house that matters. If they use the opportunity to save, further careers (through education) or even go explore the world for a year or two then it's fab.

If they're the sort who would sit at home in between picking up a few casual hours in a job that's going nowhere, no, don't get it. Alternatively, buy a house, charge them cheaper rent and put the money away for them for weddings or if they want to get a bigger place - whatever.

I haven’t done it as I can’t afford it but I would if I could. As long as it’s not a mansion, a modest house as their starter home, then I think it should be fine. They should have to meet all the bills and running costs so I don’t see how it would negatively affect ambition.

Handing them a large house and an allowance to cover living costs would be a different matter altogether and a detrimental one, so I would never do that.

Thanks for your comment but I disagree

I know three families who have done this. With two of them it has made life easier for them but they still have a huge amount of ambition and drive.

With the third family, it has allowed their son to absolve himself of all responsibilities. He's rented his house out, still lives at home and lives on the rental income.

I'd do it for our DC if we could afford it, but they would still need to work to pay the bills.

That's really generous of you. I can't really see how it could go wrong.

I suppose if the person was vulnerable they might not pay their bills, fail to maintain the place, not work because they didn't need to pay any rent? Allow others to move in and take advantage? Be an addict, remortgage the house and then default or sell it for a low amount and waste the money, then end up homeless?

But that's kind of unlikely assuming the adult child has seemed stable and capable and well up until now.

Yes, I’d definitely do it in the circumstances you describe

Must better than stashing it away so they it when they’re (hopefully!) old

Both my kids have savings and are currently renting with friends, but I am hoping to be able to give them the difference between what they can pay and borrow themselves. It won't be a house though, more like a tiny studio apartment as we live in an expensive European capital city. It's not going to be anything like a family home so I would think the ambition to move to a bigger place eventually will still be there.

Following. I will be coming into an inheritance once probate is finalised. I am sole beneficiary but intend to make
a deed of variation. I will set up a trust for my disabled daughter and my other daughter will be a trustee. The trust will buy a property for my disabled daughter and my other daughter will get an equal sum by deed of variation to do with how she pleases. I suspect her portion will open up doors for her to work overseas she is fluent in another European language

My daughter is 33. She inherited £100000 from her father when he died when she was 19. She put this into a flat in London and I paid the other £295k. The flat was initially 50:50 ownership but when she sold it 7 years later I gifted her the rest of the money. It didn't actually sell for that much more than we bought it for and because we had rented it out, after costs there was no CGT for me to pay. I had paid tax in the rental income. Saved us a fortune in renting a place.
She now has a house in Edinburgh which is now equally owned 50:50 with her husband. They did take out a small mortgage as they needed the cash for other stuff. Her husband worked to enable her to go back to university. I feel he's very much an equal partner.
It's had a very big impact on her ability to stay on the property ladder. She's extremely sensible with money and eternally grateful to her father who left her this insurance policy. Shed still rather have her dad.

Her brother got the same £100k he was 17. He took bought a flat and I paid the balance but put into his name in 2018 so the 7 years have passed. He is pretty sensible with money and rented the flat out whilst he was renting in London. He's coming back up north to live and will need to live in the flat for 9 months to avoid CGT although prices haven't risen much since he bought it and he's only rented it out for 4 of the 8 years he had it so I think the CGT would be negligible anyway.

Both know that they are lucky to have the money. They are both fairly well off. But I wouldn't have liked to have lived their childhood with a chronically sick father. It was hard.
Do I have any regrets. No I don't.

We offered to buy our DD a flat a couple of years ago. She declined because she wants to be self sufficient. She was a student at the time.
We chose to spend DH inheritance on a flat in Spain

She's visited several times and knows that when we die, she's going to be a rich girl

My son is looking at pursuing a STEM PhD route, so very much into research. He's very sensible and interested in investing and growing his capital. So I think he'll be okay.

My daughter is pursuing a physics route at Uni and is also interested in going down the PhD route as well. She also wants to be an author, so this could help her with that as an additional pursuit.

They're good kids and have always been very sensible in their outlook. We're not going to buy them a large property, just big enough to get started and perhaps have a small family. If they want more then they'll have to sell and upsize.

We live in a small house ourselves and have always lived well below our means so they're not used to lavish lifestyles. Private school was the biggest luxury they have had really.