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Helping your Children onto the Property Ladder

It is getting harder and harder for young first time buyers to get onto the property ladder. The average price paid for a starter home rose by 5.1 per cent to £211,000 last year according to the Office for National Statistics.  We look at ways of helping your children if you have spare funds available to do so and what to do if you don’t.

Parents investing in property for their children used to see their own capital increase along with helping their offspring onto the property ladder. 

However, recent tax changes have made this more expensive. 
From April 2016 anyone buying a second home, even if they only own part of it, has to pay an extra 3% in Stamp Duty.  That’s an additional £10K on a £250K home.  However, if a young person purchases a property in their own name and it is under £125K as a first time buyers they will escape Stamp Duty Land Tax altogether.  

If you are fortunate enough to have spare funds available to help your child buy their first home you can:
Gift money – that way it will escape inheritance tax as long as you survive 7 years.
Lend money – but ask for them to repay you a certain amount each month.
Deed of Trust – this will protect your investment and you can, if you wish, take out your invested money when the property is sold.  The figure will usually be calculated as a percentage of the sale.  A conveyancing solicitor will be able to put this in place for you.

If you don’t have spare funds:
The new Help to Buy ISA which can be taken out from the age of 16 will benefit, for every £200 saved, from the Government adding another £50 up to a maximum of £3K after they’ve saved £12K.  A couple can receive £6K in additional funds from the Government. To find out more please visit: https://www.helptobuy.gov.uk/help-to-buy-isa/how-does-it-work/


Help children in employment and living at home by charging them rent and saving some of the money in an ISA in your name.  A young person cannot have both a cash ISA and a Help to Buy ISA.

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