We were contacted by an Australian entrepreneur who had allocated a significant £9m budget to his daughter in her twenties. He wanted us to ensure she had gained access to and picked from the very best properties and that the negotiations were expertly handled. Beyond that, the decision was entirely hers.
We are currently working with another entrepreneur buying for his son in his twenties. We purchased a property for his daughter a few years ago and both were given a budget of £2m.
His mother joined us for the first property tour to enjoy the day and spend time with her son, acting purely as a supportive sounding board rather than a decision maker – making for a much more enjoyable experience for him.
Decide how much control to give
For most of the parents we work with, their main concern is the risk of their child acting recklessly by selling or re-mortgaging the property without their consent, or meeting a partner who tries to take advantage financially. You can retain some control by putting restrictions on the property title – seek legal advice at the outset and be clear with your child about these upfront.
Additional legalities may be sensible too, such as a co-habitation agreement if your adult child is living with a partner, to ensure their partner can’t claim a legal interest in the property. If they get married, the status changes and additional legal advice will need to be obtained.
Some of the parents we work with will involve their grown up children in the purchase process. They may have them copied into all legal emails and involve them in the financing, such as gifting a certain amount for a deposit and then acting as guarantor on the mortgage, so the child has some financial responsibility for the investment.
Where a two or three-bedroom property is purchased, the spare bedrooms are usually rented to friends, with their rent contributing to the mortgage payments, and outgoings such as service charges.
In other cases, we have seen children completely step out of the process once the property has been chosen and the purchase is handled and paid for on their behalf.
How to manage ongoing expectations
Owning a property involves responsibility and it’s important that everyone understands what will be involved. From paying bills and service charges, to managing flatmates and organising repairs, there is a lot to think about, and it needs to be clear who is responsible for each of these. In some cases, a grown up child might not be ready – or want – to take it on, or they might need support from you to become a responsible homeowner.
Whether their child is living in the property or not, some parents will want to employ the services of a property manager, who can ensure the property is properly maintained and invested in. We bought a beautifully refurbished house in Chelsea for a clients’ son and they wanted peace of mind that everything was being proactively serviced, from the air conditioning and pumps to the cinema room and AV equipment, so our property managers run the house for them and manage the expenditure.
However much influence and control you decide to have, buying a property for your child or grandchild is an enormous privilege which can help set them up for life. Just be clear from the outset why you’re doing it, and what you want from the investment.