The Bank Of Mum And Dad: How To Approach Buying Property For Your Children

As property prices continue to rise in the UK - particularly in London - it has become increasingly common for parents to assist their adult children with buying a first property. However, buying a property can be a highly emotive experience and there is often some uncertainty among parents about how best to structure the gift/purchase so as to both assist their child and protect their child's best interests.

As a parent, broadly speaking, your options are as follows:

Gift the property to your child outright. This is a simple way of helping your child and an effective form of inheritance tax planning for your estate. However, it leaves your investment vulnerable to risks in the event of your child's divorce, bankruptcy or death. It also leaves you with no control, should your child wish to sell the property and spend the sale proceeds.

Co-ownership with your child. Again, this would present an inheritance tax planning opportunity for you. It would also give you some control over the investment and offer some protection against the risk of an unfortunate change in your child's financial and/or personal circumstances. Care would need to be taken to ensure that any co-ownership documents are drafted to reflect what you and your child wish to achieve.

Creation of a trust to own the property. You could transfer funds into a trust and the trust could...