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 😊

Not quite the same but my brother and I own our homes mortgage free due to an inheritance.

We both live in modest homes, typical FTB kind of homes. I’m currently not working as I’m not well and was in a job before that was not suitable. Up until now I have worked full time. My brother works full time.
I am getting better and currently looking for part time work that will be more suitable to my condition. I’m still being paid in full from my previous job but knowing that my house is safe and secure is so reassuring.
I’m not going to NOT go back to work and I’m never going to be a huge earner for various reasons but I still have ambition and drive and having my home in no way makes me lazy. My brother is the same.

It gives us some breathing space if life throws anything at you.

I'd also wonder how some parents especially here are viewing success. If my PiL had done this for my husband he would have gone down a different career path, because salary would have been less of an issue. Instead he's ended up in a career he hates and stressed and unhappy because of it. I do think that "career ambition" is seen in terms of salary, when many crucial rolls are seen as lack of progression because they are poorly paid, or someone who wants to stay on the ground as hands on rather than working their way up to a desk job.

If it's a short marriage and it was bought for them before they were together and you document it well you make it very likely that they get to keep most if not all the value, I would strongly suggest you get proper advice around this and save your child more in the future if somethng happened. I wondered at one point how big an error I'd made not keeping paperwork around buying and selling my first flat as I put all the equity into our house, but now at nearly 20 years married with kids, I think that would be fairly insignificant. If I could I absolutely would, and frankly if we can give them the deposit so they aren't trapped in a decade of paying rent to a landlord (not landlord bashing by any means) I would.

We are planning to do the same - but I think it’s a bit ridiculous to say that it impacts ambition etc. for many today, it may actually liberate them from stress, enable them to make career decisions shaped by long term prospects, personal fulfilment, etc because they are not held hostage to the need to have a mortgageable salary or even having to pay mortgage/rent. It makes managing student debt repayment easier too and makes them more open to post graduate study.

For instance my eldest would like to do an MA and explore an art-based/publishing career. The starting [and long term] salaries in that industry v rent costs in London where most jobs are based excludes many aspiring artists/writers/publishing professionals. Her peers might be encouraged to get a sensible, higher paid job in the public sector and ‘do her art’ as a hobby. Financial freedom from a mortgage may mean personal and professional freedom - and long term success and better mental health?

Likewise, youngest DS is studying physics. He wants to do a PhD afterwards and pursue a career in research rather than industry or commerce - many of his peers will feel they have to leave uni at 22 and do the commercial/financial route because a research career may not lead to a high enough income to ever get on the property ladder. Knowing he will have a fully paid-off home frees him up (and GF if still together, as have similar life goals) to follow his research dreams, aim for a period at CERN, and even marry/start a family sooner because the financial worry is removed.

People who have goals, have studied to get degrees/qualifications, don’t lose ambition or become complete wastrels overnight because they’ve been given a house or large lump sump to facilitate getting on the ladder. If they do, it’s because of some far more fundamental character flaw - or dare I say failure of parenting - that would have been evidenced long before you start considering buying a property.

Sorry - didn’t mean to make such a long reply… but TLDR: if a parent is fortunate enough to have the means and their child is a hardworking, driven individual, then it’s much better to buy them a house. This also reduces the assets you leave upon your death, so ensures your DC get the benefit of your ‘wealth’ in your lifetime rather than lose out when the taxman raids your estate instead. No better gift than one of financial security and the freedom it brings them. No greater joy as a parent to see your child settled and secure.

I think if you do it, which I would, you need to make it totally unconditional. Arm them with the appropriate legal information and potential consequences and then leave them to it.

Also make sure they are in a position to maintain the property. DN was left money and bought a flat at a young age but couldn’t maintain it when problems arose. They’d have been better in social housing

Hi OP,

My husband was largely (90%) given a flat by his parents (they gave each of their children a flat that they already owned- DH's was a bit more expensive than his siblings' so he got a mortgage for the difference.

My brother was given a flat by our parents, and they gave much smaller cash gifts to two sisters and me. Totally fine and didn't cause any bad feeling- we're all financially secure and my brother is a bit younger so by the time he was ready to own his own place prices had skyrocketed.

It's all been fine. Nobody lost their drive- I think the amount of drive and ambition you have are largely down to your character rather than whether you have secure housing. In the current climate I think not helping children with this stuff when you can is really misguided- maybe it would have been different 30 years ago but where we live a small starter flat costs £500k+. It's not character building to have to strive for something like that, it's depressing, and also means people make career choices that are focused too much just on money.

I also find it slightly depressing how many people on this thread seem to equate "losing ambition" with "not being purely money focused". One of the joys of a financially secure background is that you can follow passions and take risks- of course sometimes that means the risks don't work out. That's a good thing in my book. I would hate to feel that the lesson I was giving my kids was "focus just on money, work very hard at something conventional, then with lots of time and some luck you may be able to buy a home, something that in a better functioning society would be readily affordable to all". This is one of the many reasons why people from richer backgrounds are over-represented in riskier careers (like acting or writing- one might add obscure academic disciplines).

All our financial planning is based on the fact that we'll be buying flats for our kids when they are ready and we have a large sum earmarked for this, given that they may want to stay in this area. I might mention the concept of marital assets to them one day as I doubt they know much about divorce law but probably separately to giving the gifts- I would hate them to feel that they were duty-bound to keep the asset in the family and therefore to stay in an unhappy marriage. It's a gift. If you can't afford to give it freely then better to work out another arrangement.

I feel a lot of responses on this thread come from a poverty mindset (not that the people posting are in poverty, but that their concern is always "not enough"- not enough money, not enough ambition, not enough security, not enough happiness). I'm not sure that that is the best way of thinking when in fact there is enough. I'm also not sure that it's the mindset that necessarily leads to plenty, quite the reverse in fact.

F

If you do it, I believe it needs to be without obligation of any return 'favours' or what they do with it or their other assets long term. If you don't think they have the financial education to do this yet, I would hold off.

Regarding ambition etc, I think its very child dependent. Some it could make them lazy, less focussed. As you mentioned maximising ISA's for years, they will also have a large investment pot alongside so may not need to do much more. However, it could also give them the freedom to follow passions and end up in a more fulfilling career by not needing to focus on higher earnings.

Ultimately only you know your children well enough to know which category they are likely to fall in. I'm sure there are many examples of both end results from similar gifts. The way they were raised and their individual temperaments are much more important.

Are you committed to giving them a home in particular, rather than cash or other investments? If you’re worried about stunting ambitions then maybe worth considering that several careers benefit from location flexibility in the early years, even international flexibility. Owning a properly can be a practical barrier in that case. Not insurmountable but still significant.

My friends’ parents did this, it didn’t affect her career, she’s a successful architect. However she did lose half of it in a divorce and had to start again….

My parents did this for me. And I had to put £600 a month into savings (which is how much a mortgage would have cost me at the time of buying it) they checked I saved and I wasn’t to use the savings for anything that wasn’t important.

People don't value things they don't pay for.
Don't do it.

Depends on the child. A close friend sold the house her parents bought her so that she could travel around the world. She did, had a lovely time but she is unlikely to ever be in a position to buy a new house.

Buy house: let them live there, but DO NOT put it under their name.

We will do this when mine are bigger. I want to help them so they won’t have to pay rent or worry about a mortgage, etc., but the house won’t be under their name until my husband and I decide that it should be.

A 20 year old should not own a house. They should still feel like they need to work towards something and build their own future. This way, you’re helping them get started, but they don’t feel entitled to it.

Where I’m from, it’s very normal for parents to buy houses for their kids. However, I’ve only seen people become successful when the house wasn’t put directly under their name.

This thread feels a bit like a parallel universe so I haven't got much to offer. But I have seen one very wealthy family where two of the children used their privilege to pursue academic interests and charitable giving, and one child who descended into terrible drug addiction.

You've said your kids are sensible and motivated but even so, I would consider the benefits of letting them find a first job, house share with friends, struggle just a little before stepping in to help them with their first house purchase. Maybe they could save up the deposit and you could provide the rest? But you know your kids best, and the fact you're asking the question shows you're doing the right thinking.

Amazing gift however 50/50 chance it will get split 50/50 in a future divorce…Happened to my uncle and the family never forgave either of them!

I really think it depends on your child’s personality. We couldn’t gift them a house but we could give them 100,000 each. One is on minimum wage works full time in a care industry. The other earns about 38000 but both don’t take anything for granted are very appreciative and work hard.

I have extended family who have done this, and the assets are protected by various structures.

in the male’s case he was grateful for the help. In his Sister’s case, she hit her parents up for an upgrade, which they did (small millions) but contributed the same back to her brother which is excellent.

both siblings work, and pay a very small rent back to the financial structures that own the houses. they will of course inherit those structures in time, so it’s a circular thing.

the negative side has been the son in law from what I’ve been told. I mentioned elsewhere he has no “go” to improve his lot. He is best described as the passenger in the car, going from A to B without contributing anything to the fuel so to speak….

There is a half expectation that marriage will fold given time.

Not quite the same situation but myself and my husband bought a house in 2020 and had a mortgage up until this February when I inherited a large sum to pay off our mortgage in full and have some left over. The inheritance was from my grandad who I wasn’t close to and my dad died a while back so it went to myself and my brother.

It’s an enviable position to be in at 33 but I do find myself feeling like I’ve cheated the system somehow compared to my peers who have mortgages. I would suggest gifting them a large sum perhaps so that it doesn’t cover the whole amount but gives them something to strive for and a sense of achievement when they eventually do pay it off from their own hard work.

It’s the parents’ fault for putting the deed in the kid’s name. Buying a house for your child is one thing, but putting the house under their name is another.

Usually, when people in my country buy houses for their kids, they don’t put them directly in the child’s name either. Divorces can happen, so you either have a prenup or keep the house under the parents’ name.

I saw an IG post on this. Guy had done it for 3 kids. Not a strap of ambition left between them. None of them worked in “proper” jobs.

My DCs have inherited a fairly substantial sum, following the death of their father and the subsequent death of his father. They have the money already and they are late teens / early twenties. An awful set of events, of course, not ideal, but that’s what has happened. It’s safely invested for the future until a time which they may need it.

If you’re planning to do this, OP, you need to detach yourself from the potential consequences and don’t get too invested in what they do with it. If your gut feeling is that they will be responsible, then do it. It should not be done with strings attached and you should not attempt to navigate how they protect the money if they marry. They both sound like responsible, conscientious individuals from your comments, so that’s encouraging. As with all significant matters, tell them to get legal and financial advice from professionals as and when they need it, before big commitments are made.

Marriage has always been about protecting family assets. It’s a financial transaction at the end of the day. When only love and romance are considered you end up with the shitshows of separation and divorce you read about on MN.

@Cozylittlecottage I think you have been incredibly sensible with your planning and advice.

It is entirely dependent on the person. If they have drive and ambition and work hard, it will be a brilliant boost. If they are not, it can reinforce their laziness and work out badly. Like the saying 'rags to riches, riches to rags' in 2 generations.

Yes, same here - I went on one date with a self-declared socialist who it turned out was happy for wealth to be redistributed as long as it didn’t apply to him, because he’d happily accepted a 4-bed house from his parents and his attitude was that he was above ever having to do a job he didn’t want to do. He was an insufferable entitled hypocrite. Like some others, I would not do this even if I was a billionaire. If you have the means to do this then your children will already be benefiting from the privilege of wealthy parents in other ways (cultural capital, connections, lifestyle). Don’t you want them to have to work for anything?