Warning for Bristol Parents: Read This before Helping Your Child onto the Property Ladder

Warning for Bristol Parents: Read This before Helping Your Child onto the Property Ladder

If you’re considering giving your child a helping hand to buy their first home, you’re not alone.

Figures show that 45% of twentysomethings who purchased a property last year did so with a cash boost from the Bank of Mum and Dad (Bomad).*

But just because something is common practice doesn’t mean it’s risk-free.

So, before you transfer any funds, it’s worth heeding the warning issued earlier this month by a law firm.

Is it a gift or a loan? 

Coventry-based Brindley Twist Tafft & James revealed that it is seeing more and more disputes where parents are trying to claw back Bomad funds.

The problem often occurs if parents have handed money to their child to buy a home with his or her spouse.

If, after a few years, the relationship breaks down, things can get messy when the matrimonial assets are divided. Generally (and we advise you to seek your own legal advice), gifts tend to be divided equally in a divorce.

Hence, the soon-to-be-ex-spouse argues the funds were a gift, and they don’t need to pay back half of the Bomad funds.

Meanwhile, the parents claim the funds were a loan and should be repaid.

Top tip

The courts tend to err in favour of funds being a gift – unless there is documentation to prove otherwise.

So, whatever you as a parent think is morally right in the situation is a moot point.

An informal agreement made in goodwill over a Sunday lunch won’t necessarily hold much sway in court.

If you’re loaning your child funds and expect them to be repaid at some time in the future, it’s worth getting legal advice first and getting the agreement down in writing.

Formalising the Financial Arrangement

If you want to formalise the financial arrangement and ensure it is treated as a loan, discussing loan agreements or a deed of trust with your solicitor is recommended. These legal documents provide clarity and peace of mind, protecting you in case of any future disputes.

What About the Bristol Market?

In Bristol, average property prices for first-time buyers can vary depending on the area. For example, in Clifton and Redland, typical prices range from £215,000 upwards, making parental assistance a crucial factor for many young buyers.

To help you navigate the local market, our team offers detailed homebuying advice and can assist with understanding both legal and financial aspects.

By ensuring that you are fully aware of both legal and market factors, you can help your child enter the property market with confidence while protecting your own financial interests

If you’d like more advice on purchasing a property, get in touch with us today. Whether you’re buying, selling, or helping a family member, we’re here to provide expert guidance.

*Institute of Fiscal Studies
This article does not constitute legal advice. Always consult a professional for guidance based on your personal circumstances.