Take legal advice before gifting deposits, parents warned

The Law Society says parents should seek advice from a solicitor before handing over tens of thousands of pounds in a bid to get adult children set up in their first home.

The end of the stamp duty holiday on 1 January 2010 means thousands of first time buyers are climbing on the property ladder now to avoid charges, but with deposits hovering in the 25% range, more consumers are turning to the bank of mum and dad for financial assistance.

The legal body says consumers must consider the legal aspects of such large loans, which can be upwards of £50,000 thanks to today’s stricter mortgages, and ensure their interests are protected. Now that 100% mortgages are a distant memory, deposits can be as much as 40%, out of reach for many people who want to buy their first home.

It cites research from estate agent Douglas & Gordon which shows that almost eight out of 10 first-time buyers in London are being forced to ask their parents to step in and help with finance for deposits as loan options disappear.

Law Society president Robert Heslett said: “The imminent end of the stamp duty holiday means many people buy their homes now