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How to be fair to all of your children

2019 may promise many changes but one thing that won’t be one of them is the need for the Bank of Mum and Dad to help their children on to the housing ladder. But how do you be fair to all of them?

According to the National Wedding Survey published by bridebook.co.uk the average cost of a wedding in 2018 was £30,355.

Yikes. How many daughters do you have?

The Office for National Statistics said in 2017 that a full-time worker could expect to pay around 7.8 times their workplace-based earnings on purchasing a home in England and Wales. The average deposit needed for the average house then is in many cases, well out of reach for the younger adult generation.

How many children do you have that might need help to get on the property ladder?

And what else do they need? A car to get to work to earn the money to pay the rent and save for a house deposit? A hand with onerous student loans or university fees? Even a wedding?

So many parents, especially those of the Baby Boomer generation are telling us they want to help. Many tell us they feel lucky to be in a position to do so. Final salary pensions, university grants and raging house-price inflation for decades have given them a pot of investable wealth and they really want to pass it on.

But, equally, this same generation feels the agony of how to help – how to be fair, how to be, well, a proper parent.

A wide-ranging report from major insurer and lender Legal & General in 2017 identified that 50,000 property transactions would in 2018 be enabled by parents digging into their pensions for a deposit. Another 23,000 would be supported by parents’ annuity income and another 44,000 by equity release from parental homes.

But is this fair to you? Piling into your pension when you are 60 to help one of your kids with a chunky deposit runs the risk of a potentially serious shortfall in retirement income in your 70s and 80s. Equity release, while a suitable alternative for some, is certainly not the right answer for all.

The Bank of Mum and Dad has to stay in business after all, or there was no point in it in the first place.

So what can you do? Firstly, talk to your children about what they want. While one may welcome a loan or a gift for a house deposit, another may well not be bothered and instead prefer to deploy a bit of their inheritance in another useful way. Do you treat them equally or according to their individual needs?

Secondly, you approach it in a business-like fashion. To avoid awkward conversations later, make sure everyone understands what is required of them. If you are offering a loan make sure there is a schedule of repayments, if it is a gift make sure you have consulted a professional to make sure you (or your kids) don’t cop a nasty tax liability.

Thirdly, just remember that no-one ever told you it was easy being a parent and that we at the Family Building Society fully understand that. That’s why we’re here to help.

Please feel free to fire us over your experiences and stories and we’ll add them to our collection – they can help others in a similar situation and it all helps us to be a better building society. 


By Steve McDowell
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Family Building Society
Ebbisham House
30 Church Street
Epsom
Surrey KT17 4NL
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