Buying a home with family members
Many first-time buyers are opting to share the financial burden of purchasing a property with another person. However, joint ownership can lead to complications, so it is vital that the purchase is well planned and that all parties are comfortable with the arrangements.
Rita Tinney, Group Sales and Lettings Director at Keats Estate Agents said: “There has been a noticeable rise in first time buyer activity over the past year, many of whom have been ‘helped’ into their new home by the Bank of Mum and Dad or even the Bank of Grandma and Grandad.
“Usually the helping hand is by way of a ‘gift’ but there have been some occasions recently where the helping hand has also insisted on having a share in the property. While this sounds an ideal way to get first time buyers onto the property market, we always recommend that all parties take very sound advice from either an accountant or a solicitor.
“Future arrangements such as whether the contribution is a gift or whether it is a loan to be repaid over a period of time, in which case how much and over how long, needs to be clarified. No one knows what lies ahead.
“We are aware of a situation where the recipient of a ‘loan’ was forced to sell their home on the death of the donor in order to settle the deceased estate and another where the tax implications of the ‘gift’ caused a financial penalty for the beneficiary.
“Keats Estate Agents always recommend that a robust legal agreement is drawn up to clarify the status of the money and to protect all parties. A good local solicitor will always guide you through this minefield and their fee will be money well spent.”
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