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The Bank of Mum and Dad

You may have read in the press lately (in particular, The Times of 31st August 2019), concerns about defaults on “the Bank of Mum and Dad”.

Over the years, we have seen many cases of parents kindly helping their children, or sometimes their children and a partner, to acquire a house, usually their first one.

Typically, the Bank of Mum and Dad will provide some money to help their child complete a purchase.  As lawyers, it is our job to establish the basis upon which this money is being provided.  Is it a gift?  Is it a loan?  Is it something else?  Is it, perhaps, an investment in the property so that part of the property will belong to the parents?

In the excitement of buying a house, these questions are often seen as intrusive and, sometimes, parents and their children fail to deal with them properly.  This means that, if the worst happens and there is a falling out, the child dies, becomes divorced, splits up from the partner, or one of the parents dies, there can be great confusion as to the rights of each party.

According to the report in The Times, the Bank of Mum and Dad is the UK’s tenth biggest lender involved in one in five property purchases.  It will give or lend an estimated £6.3billion to family this year, with an average “loan” of £24,100.

The important thing is to make sure that the basis upon which the money has been provided is clearly agreed and, crucially, set out in writing.  Ideally, the parents should have their own independent legal advice rather than relying upon the solicitors who is acting for the child.

Buying a house, especially the first one, is an exciting, busy and stressful time and it is easy to put aside such matters for another day.  Don’t do that.

According to The Times there has been a sharp increase in the number of court cases between parents who have provided funds to their children and/or their children’s partners.  Do not become a statistic in this sorry state of affairs.  If you are generous enough to help your children buy a property, make sure that it is dealt with properly and if you are a child whose parents are generous enough to help you, do the right thing and make sure everything is properly and clearly recorded.

If you want any assistance with any aspect of buying or selling a house, please contact Julie Rowan on or telephone 01208 72328

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