Property Drop Issue 61

26 ADVICE
Advice for bank of Mum and Dad
In today’s property market, the bank of Mum and Dad, (and increasingly, the Bank of Gran and Pops), is as
relevant as ever with an estimated 60% of first-time buyers receiving some financial help from family members.
For most parental (or grand-parental) bankers, the
greatest difficulty is generally finding the cash!
But Christy Bartlett of Stacks Property Search says
this hurdle should by no means be the start and finish
of the exercise. He says, “As bankers, it should be your
responsibility to ensure your investment has been a wise
one – to protect your own interests and those of the
family members you are helping.
“Our advice to parents or grandparents who are
gifting or loaning finances for a property purchase is to
be clear at the outset about the rules of engagement. If
you wait until the perfect property has been found, it’s
too late – emotions get in the way, and everything will
happen too quickly. You’ll find yourself being the bad
guys when you start asking questions and imposing
conditions.
“Before you commit to anything, work out exactly
what you can afford, whether it’s a gift or a loan, and if
you have other children / grandchildren, whether you’ll
be able to do the same for them when the time comes.
You may want to consult and take advice from your
financial adviser in this respect.
“Once you’ve established the amount you can
comfortably afford, it’s sensible to offer it on the
condition that you will be involved in the decisionmaking
process. Start by asking the following questions:
• What kind of property do you want and / or
need?
• Where do you want it to be and why?
• Where do you think your life will be in 5 years / 10
years / 20 years?
• How much mortgage can you afford, and what will
your payments be?
• What do you anticipate your monthly running costs
will be?
• Do you anticipate buying something that requires
improvement / work?
• Have you considered a lodger?
• What is your thinking on resale / capital growth and
exit strategy?
“They won’t necessarily know all the answers to
these questions, but you will have started to get them to
think along the right lines and to encourage debate and
discussion. The chances are you have bought a good
handful of properties in your life and will have gathered
experience and knowledge along the way; first time
buyers are wet behind the ears and there will be many
factors that they haven’t considered.bettter
“The situation is further complicated if they are
buying with a friend / partner, especially the latter where
emotions may get in the way of correct financial etiquette.
“While it can make good financial sense, there are
additional considerations to be taken on board. It doesn’t
sound romantic, but it’s sensible to talk about things
that might not usually be brought up at this stage in a
relationship, running all potential scenarios through in
conversation. However strong a relationship is, it’s vital
to consider what would happen in the event of a breakup
as you won’t be covered by the matrimonial laws that
protect married homeowners. Buying a property together
is a huge commitment to each other and there needs to
be a high level of maturity involved in the decision.
“In addition to all the usual documents, the solicitor
should draw up a ‘declaration of trust’ for both parties
to sign that sets out the detail of who has contributed
what, and what happens in the event one or both parties
wish to sell.”
Stacks Property Search, 01594 842880 / www.stacks.co.uk
• Double garage
• Underfloor heating
CLARENCE HOUSE,
PENTWYN LANE, PENALLT, NP25 4SF
Brand new detached executive home
within the sought after village of Penallt.
• En-suite wet rooms
• Fitted wardrobes
• Countryside views
To arrange a viewing please contact
Roscoe Rogers and Knight
on 01600 772929