According to data released by Legal and General and the Centre for Economic Business, parents are, on average, helping out to the tune of £18,000 (although London is over £30,000 and the South East over £20,000) in 27% of all house purchases, so around 317,000 properties a year.
Whilst there is a discussion to be had about the cost of housing (some are borrowing 9 times their salary) and the long term sustainability of this situation, of a more immediate concern is how any money put into a property is protected.
I have found that the focus is on buying the house, getting in and redecorating it; visiting IKEA and getting on with the business of living in it. Very little attention is paid (if any) to how the purchase is being funded or what will happen if things go wrong in the relationship – and sadly, they do go wrong.
We are often told that a house will be the biggest value purchase we make in our lifetime with the highest value loan attached to it – but when we buy it, we rarely think about shares in the house, paying back loans from family or if it was indeed a loan. The law in this area for those couples who are not married or in a civil partnership is not overly helpful either, dare I say scrappy. There is an old piece of law made over 100 years ago that might be able to help over certain items if you were engaged to be married at any point but other than that, you are in the murky world of who said what to whom and what did they mean by it. You are also potentially in the murky world of having not told your mortgage company what you were doing and then paying legal fees to work out what everyone meant all those months/years ago in the conversation over coffee and cake.
Please, please, and once again please, get yourself a Living Together Agreement. It can be more than a simple trust deed or declaration of tenants in common/beneficial joint owner. You can iron out all the niggles over who is paying for what, what is a gift, what is a loan and what should happen if you separate and you are not married. Hopefully, you will never need to use it but if you do, you’ve sorted out what is to happen at a time when you were both on the best speaking terms ever. Frankly, if you can’t agree things then, when all is rosy, you have little chance later on when emotions are running high.
The average house price is £226,906 – according to HM Land Registry figures at April 2018. One percent of that value (£2,269) is over twice the average cost (in my experience) of having a Living Together Agreement drawn up – but probably only a third of the potential legal costs in having to issue court proceedings to resolve a dispute. As our American cousins say, you do the Math.