Should you help your children to buy a home?
The Bank of Mum and Dad is not a benevolent institution. It is an inequality engine. Helping your kids to get on the property ladder may feel like good parenting, but it fuels a system that rewards birthright over merit and privilege over effort.
And this is not just about fair play — although that matters. It is about distortion. Housing should be about what you earn, not who you are born to, and yet we're hurtling towards a feudal set-up where access to shelter hinges on parental wealth. In 2023 more than half of first-time buyers had financial help from family — so much for social mobility.
• Read more money advice and tips on investing from our experts
Meanwhile, the parents are often the ones doing the sacrificing. Draining pensions, dipping into savings, compromising their retirement or their future care needs to prop up a politically induced broken housing system.
Others face tricky family politics. What if one child gets help and another doesn't? Suddenly the family WhatsApp group turns into a minefield. And don't forget the long-term cost, because if that gifted deposit pushes mum or dad below the threshold for local authority-funded care, the state picks up the tab. So we all end up paying for this bad idea.
It also warps the market. When we inflate demand from cash-boosted buyers, prices are kept high and the truly independent are shut out. It's no coincidence that areas with the most intergenerational support are often the least affordable — and the most resistant to change.
Many of those lobbying against new homes do so under the guise of 'heritage' or 'environmental protection'. All the while ignoring the paradox: if you really want to help your children, stop blocking homes for them to live in.
This is the real betrayal of Britain's working class. We have normalised parental bailouts instead of fixing the system. Homeownership should be a reward for work and not a birthright.
Parental gifts may be well intentioned. But they entrench inequality, destabilise retirement and price out millions. Let's call it what it is: a personal favour that perpetuates a national failure.
• Rachel Reeves is right, but she is walking a tightrope — with our money
Helping your children get on the property ladder is a deeply personal decision — but if you're in a position to offer support, I'd argue it is a good idea.
Intergenerational fairness is one of the strongest reasons why helping your child buy a home is the right thing to do. Many parents benefited from a housing market that has since become vastly less accessible.
In the 1980s the average age of a first-time buyer was about 27. Today it's closer to 34 — and that's often with help. Property prices have risen much faster than wages, making it almost impossible for many twentysomethings to buy without a financial leg-up.
If you plan to pass on wealth to the next generation, why not do it when it could make the biggest difference? An inheritance often arrives when adult children are already financially stable or even nearing retirement themselves. But helping them in their earlier years will allow them to stop wasting money on rent and start investing in a secure, long-term home.
A study by the HomeOwners Alliance found that 54 per cent of homeowners with adult children had either already helped them buy a home or expected to in the future. Among homeowners whose children do not yet own property, 59 per cent worried about their chances of ever buying a home.
But help doesn't have to mean writing a big cheque. There are several ways in which parents can support their children without handing over large sums. You might consider acting as a guarantor on a mortgage or getting a joint mortgage with your child.
There are also distinct financial advantages to the so-called Bank of Mum and Dad. A gift used for a house deposit is inheritance tax-free, provided you live for seven years after giving it. This can also reduce the size of your estate and potentially lower inheritance tax on other assets.
Helping with a deposit means your child may qualify for better mortgage rates, so that they have lower monthly repayments. A larger deposit can also help them to buy a better home — whether that means a larger space or a more suitable location — and reduce the need (and cost) of them moving again soon.
Of course, this all depends on your own financial situation. And one final piece of advice: be fair. Helping one child and not others can lead to family tensions. If you're lending, be clear and be consistent.
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