Protecting the Bank of mum and dad: assisting in the purchase of a property - Kuits Solicitors Manchester
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Protecting the Bank of mum and dad: assisting in the purchase of a property

Protecting the Bank of mum and dad: assisting in the purchase of a property

24th May 2021 - Published by Kuits Family team

Unmarried, cohabiting couples continue to be the fastest growing kind of relationship, increasing as they have by more than 25% over the last ten years or so. Such relationships create a number of legal issues which can sometimes involve parents, especially where for example, they are asked to assist financially with the purchase of a first, and now more frequently, a subsequent property. In the first of our ‘Protecting the Bank of mum and dad” series of articles, we consider what steps can be taken to protect parents, and indeed their children, in such circumstances.

Parents are often asked to help with the buying of a property either in the sole name of their child or jointly with his/her partner, most frequently by funding the deposit. The first thing to be considered by those parents is whether the funds are to be provided by way of a gift, or a loan.

Gifting the money

Whilst there can be tax advantages to providing these funds as a gift to a child, there can also be unintended consequences, which if the parents considered at the time, they would have wished to avoid. For example, if the gift is used towards the purchase of a property which is later occupied jointly by their child and his/her partner, in the absence of a written agreement between the couple that property may become the subject of a claim by the partner. If successful, that partner will effectively benefit from the gift made, which the parents would almost certainly not have wanted, nor intended. In our next article, we cover how written cohabitation or nuptial agreements can avoid this situation.

Loaning the money

An alternative to a gift would be a loan. It is important to ensure that the terms of the loan, for example its purpose, repayment terms and interest charged, are properly recorded and that the document is executed by all parties. In the event of a dispute between the couple, this avoids claims that the sum provided was a gift or was never intended to be repaid. It is also recommended that such a loan be registered at the Land Registry in the same way as a bank/building society mortgage.

Another alternative is co/joint ownership with the child concerned and his/her partner, if they are already cohabiting or intending to do so at the property being purchased. This gives security to the parents and there can be no misunderstanding with their child and/or his or her partner as to their (the parents’) beneficial interest in the property, in the event of a dispute between their child and his/her partner.

Get in touch with a Family lawyer.

If you would like more advice on how to protect your assists when helping your children or would like to discuss anything else mentioned in this article further, please contact Senior Family Lawyer Colin Davies on 0161 838 8180 or email


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