Bank of mum and dad putting £10,000s at risk by simply ‘hoping from the best’

QualitySolicitors create series of property mini guides to help protect people entering into property arrangements.

A third (33%) of parents now see it as their ‘parental duty’ to contribute to their child’s first property purchase, with 45% gifting over £10,000 to their child and one in five (17%) over £50,000, according to new research from QualitySolicitors.

In the process, they are making major sacrifices, with one in ten (10%) remortgaging and a further one in ten (10%) selling their home and downsizing. However, the vast majority have no protection in place for their gift, with 80% saying they simply handed the money over with no legal advice and ‘hoped for the best’.

That means should their child’s circumstances change, for example splitting from their partner or falling into negative equity, the money could be lost.  It also leaves children exposed to potential sibling disputes should a parent die.

QualitySolicitors, the leading network of UK solicitors, today launches a series of top tips to give legal and life advice to parents to help better protect themselves, their children and their money. The mini guides also include advice for buyers that are entering into property arrangements with other people e.g. collectively buying with friends.

Parental sacrifices

According to the research, only 12% of parents take any type of legal advice before contributing to their child’s purchase.  This is all the more surprising given the sacrifices they make to help their children out:

  • The vast majority (72%) dipped into their savings
  • One in 10 (10%) remortgaged their own property
  • A further 10% sold their home and downsized
  • 7% postponed retirement in order to raise the funds to contribute to their child’s purchase

Funding the purchase

As well as drawing on the bank of Mum and Dad, first time buyers are looking at other ways into the property market with nearly one in five (18%) saying they have bought or will buy with a close friend. 4% buy in order to become a ‘live-in landlord’, bringing in a tenant to help with mortgage repayments. And 7% of parents say they’re helping their child buy a property so that they can live there with them in a “multi-generations home”.

Surprisingly though, 45% of buyers say they’ve not even had an ‘informal discussion’ with the other people that have contributed to their purchase about what would happen should their circumstances change, such as being made redundant, relationships breaking down or needing to sell the property.

Misplaced investments

One in ten (11%) parents see their contribution towards the property purchase as an investment, however without the proper legal paperwork in place, there is nothing to protect their contribution should their child view it as a gift.  Just one in ten (11%) said they had something in writing outlining exactly what had been agreed with their child.

In the dark

Over half (52%) of parents said they did not feel fully aware of the legal implications and obligations of giving financial support to their child. First time buyers are as much in the dark as their parents – nearly half (47%) said they did not understand fully the legal implications of getting financial support from a third party.

Buyer concerns

Three quarters (74%) of first time buyers who have accepted financial support admit having concerns about accepting it. 31% feel worried that they’ll never be able to repay the loan. 27% feel guilty about owing someone else money and 21% feel ‘caught in a trap with no way out’. One in five (19%) even admit to feeling ‘resentful’ that they’re ‘financially obligated’ to others.

Martyn Morgan, Conveyancing Expert at QualitySolicitors, said: “It is natural for parents to want to do as much as they can to help their children get a foot on the ladder. However, the research shows that often their goodwill is misplaced and can actually lead to more problems further down the line if something goes wrong.

“Our message would be that protecting yourself isn’t a sign of mistrust.  Far from it.  It’s actually the best way of protecting the long term relationships you value.  Our mini guides are designed to help those entering into property arrangements to navigate the issues we see time and again and get people thinking about protecting themselves better.  Protecting yourself doesn’t have to be complex or costly and it can save heartache and tens of thousands in the longer term.”

To view the guides, visit our conveyancing page

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About QualitySolicitors:

  • Launched in 2010, QualitySolicitors is a group of law firms across the country working as part of the QualitySolicitors brand. Only one firm per local area is selected to become a QualitySolicitors partner. Customer feedback forms an integral part of the selection process.
  • QualitySolicitors’ national network of lawyers consists of over 100 branches across England and Wales.
  • QualitySolicitors lawyers are experts in their fields dealing with both consumer and SME legal matters. QualitySolicitors offers a personal, local service but with the assurance of a recognised national brand.
  • QualitySolicitors’ website address is
  • In 2011 QualitySolicitors secured equity investment from Palamon Capital Partners, a private equity house with a £700m fund.

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