A mum, dad and child hold hands as they walk along a beach

Helping children onto the property ladder

The latest English housing survey covered in the media today highlights the fact that the number of owner-occupiers in the UK has fallen to its lowest level in 25 years. The percentage of owner occupiers is lower now than at any time since the heady days of the mid-80s when many of those now in their late 40s and early 50s might have bought their first property.

Younger people in particular are finding it increasingly difficult to access the owner-occupier market, with mortgage lending criteria tightening considerably since the financial crisis, and property prices continuing to rise, especially in London and the South-East.

If you have capital available you may wish to help your child buy their first property. This would also be good Inheritance tax planning as any gift would fall out of your estate once you have survived it by seven years. However, you may be concerned about what might happen to the property in the future which is a reasonable concern given that approximately half of all marriages now end in divorce. No-one wants to find that they have helped their son or daughter buy a property only for part of the property’s value to pass to that child’s estranged spouse or to their creditors.

There are several ways of dealing with this including making a loan to your child, although this will not achieve the same tax saving. You might also want to consider using a trust as a protective wrapper for the property. This can achieve a tax saving, help your child acquire a property and ensure that you remain in control so that your generosity does not come back to haunt you sometime in the future.