It is becoming more and more common for parents (and sometimes other family members) to give a helping hand to their loved ones, to get them onto the property ladder.  However, this doesn’t come without risk and seeking the correct legal advice is absolutely paramount, especially if your loved one is not married to their partner. In that scenario, both the client (borrower) and the parents (donor) need to ask many questions. So many parents presume it is enough to be the parent of their child to ensure their contribution is deemed a gift to that child, and not to their partner, but this isn’t the case.

Firstly, you need to be 100% satisfied it is a gift. Further, you need to ask yourself, would you only ever want your own child to gain from the benefit you had provided in their purchase transaction?  If the answer is yes, then you should always seek full advice prior to providing any gift.

If a client makes the choice to be joint tenants, this means they have a 50/50 share with their partner and so the deposit follows on their instruction.  Whilst a joint tenancy can be severed after the event, ensuring the shares of gift go to the intended recipients, a Deed of Trust is usually required before the transaction takes place. This is why we will always inform anybody providing a gift to seek independent legal advice, as due to a conflict of interest we cannot advise the person providing the gift and the receiver of that gift.

My advice to unmarried couples would always be to protect the share they contributed.  However, it can be a tricky business when you have a happy couple purchasing their first home, and they presume all will be well.  Sadly, we all too often see the results of someone not acting on the appropriate advice. and parents, grandparents, aunts and uncles not seeking advice prior to providing a gift.

Benefitting from a gifted deposit is a of course a positive thing, however the priority should be protecting the benefit you have been given in the first place.

If you would like further information and advice on gifting a deposit, please visit where you will find our Property Team contact details.