The reality is parental assistance has been around for many years, certainly during the recession and the years since. We live in different times and many parents feel this generation has it harder than during their time when affordable housing and free university education was available, and when many also benefited from rising property prices. Historically, it is likely parents helped their children with the deposit when they had just started in a new job and had not yet built up a sufficient deposit or had to move jobs during the recession. Now, I see more and more situations where the Bank of Mum and Dad is not only helping with the deposit (and often in relation to children well into their 30s) but also with the "extra" money you now have to offer to try and secure a property (as well as to cover all of the associated costs such as the Land and Buildings Transaction Tax).
In general, and particularly in Edinburgh, there is a shortage of properties on the market. This means demand is high when a property does come on the market, especially in well sought after areas. In most cases in Edinburgh, properties are selling for above the home report value and the average selling time is under a month. All this means is that it is a Sellers' Market! For buyers, they have to move very quickly and be ready to not only have the funds to meet the home report value of the property, but to also have some in reserve to offer a premium at a closing date or as a way of securing the property early.
It's very important in these situations that all parties get the right advice. It's not necessarily a simple case of parents passing on an inheritance early, there are other factors to take into consideration. Perhaps a young couple are moving in together and the parents of one of the buyers has assisted their son or daughter with the deposit. They may be concerned in ensuring their child has secured his or her position in the event the young couple split, and to ensure their child gets the amount back they originally put in to the property. It may also be the case the parents want to lend the money instead of gifting it: which could mean taking a security over the property, much like a bank would when providing a mortgage. There are a number of considerations, both for the parents and the child. There are a number of tax, succession and practical issues all to be thought through. If a mortgage is also being sought, there are likely to be conditions imposed by the bank in relation to a gifted deposit so it is crucial that advice is sought at an early stage.
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