It may not surprise you to know that the “Bank of Mum and Dad” is now one of the top 10 lenders when it comes to helping to get on to the property ladder.
Recent research shows that family and friends put up over £6.5 billion to support the purchase of over 300,000 properties – on average £22,000 per property. That trend is continuing, according to the Post Office, who say that in their recent survey the sum per property being provided by family and friends had increased to over £24,347 per property.
Whilst that financial support can be invaluable, it is an issue I increasingly see when relationships break down – causing arguments and sometimes litigation – as proper consideration was often not given as to whether and how that money should be protected.
As a general rule, if the money was not given as a gift, then steps should be taken to protect the sum involved and those providing/receiving the money. If it is meant to be a gift for a child (but not their partner) then consideration should be given to drawing up a Living Together Agreement – a document that essentially sets out who put in what. If it’s a sum of money that a parent expects to have returned on the sale of a property, that is often best protected by drawing up a Declaration of Trust.
In the event of marriage or if a child is already married, consideration should be given as to whether a pre-nuptial/post nuptial agreement should be drawn up – setting out, when the money is given, what should happen to the money provided by parents in the event their child’s marriage breaks down.
Taking legal advice at an early stage to ensure everyone knows the basis on which the money is given and when it is to be returned, is key. Farleys’ teams of family law, conveyancing and dispute resolution specialists are on hand to provide comprehensive legal advice tailored to your circumstances. Call us today on 0845 287 0939 or submit your enquiry online.