Expert Calls For Focus On Legal Issues
The growing number of first time buyers asking for a helping hand from loved ones in order to get on the property ladder must not ignore the legal issues that such decisions can create, a specialist at Irwin Mitchell has revealed.
Housing minister Grant Shapps and the Council of Mortgage Lenders recently met to discuss the range of problems facing those buying their first home, including how they have been affected by problems such as the shortage of funding.
One of the key trends that was touched upon was how the number seeking financial assistance from parents or other relatives has shot up by almost 50 per cent in the past five years.
Lisa Shenton, the head of Irwin Mitchell’s Conveyancing team, said such changes in the market were unsurprising but urged buyers and their loved ones to be aware of the implications this can have.
She explained: “These statistics undoubtedly mirror our current experiences in supporting those making their first step onto the ladder.
“Most of the first time buyers that we act for typically now receive some sort of financial help from family members, which is a particularly stark contrast to the position seen in the market only a few years ago.
“Notwithstanding that they may have strong relationships with their children, we would always recommend parents take legal advice before gifting or loaning a deposit to their children, particularly if the child is buying with a friend or partner.
“This is particularly important because parents may be keen to protect their contribution in some way should such relationships breakdown in the future.”
Lisa added that buyers themselves need to take note of what is expected of them when it comes to arranging a loan that will help them get their first home.
“Some buyers also don’t realise that they must tell their mortgage lender if they are receiving a loan or gift from family or friends,” she explained.
“If they inform their lender at the last minute, the lender may have to issue a new mortgage offer and this may delay completion.”