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Bank of Mum and Dad: Considerations when helping your children with a property purchase

An increasing amount of young people are relying on the ‘bank of mum and dad’ to purchase their first home. According to a recent Savills report, 52% of first time buyers received help from their parents in 2024. This trend is expected to continue and parents should consider a number of factors in supporting their children in this way.

The support may be by way of:

• A financial gift
• A loan
• An assignment of contract to buy a property off-plan

Financial Gift

Most importantly parents must decide whether to make a gift or a loan. A gift is the transfer of money without any expectation of repayment nor any interest in or control over the property.

If the child is intending to use a mortgage, a gift may be the only option since many mortgage lenders will not proceed with loaned funds. It is sensible to speak to a mortgage broker on this point at an early stage. Where a mortgage is involved parents will need to sign a declaration of gift in the mortgage lender’s required format.

Parents should consider ways in which they may protect their gift for the family, for example, should the child later be in divorce proceedings, or errantly sell the property. If a parent is a co-owner this will increase the Stamp Duty Land Tax payable for second property ownership. Parents may wish to consider requiring the child to enter a restriction on the title requiring their consent to sell, which imposes an administrative hurdle (although no concrete protection); or mooting prenuptial agreements.

There are tax implications. If a parent were to die within 7 years of the gift then it may be subject to inheritance tax. Gifts of up to £3,000 are exempt from inheritance tax and the allowance can be carried forward for one year, making a potential £6000 available.

Loan

A loan structure can be used to give the parents more control, and this can be supported by a legal charge (a mortgage) over the property in favour of the parents, subject to the agreement of any principal mortgage lender. The parties are free agree the detail of the loan terms, whether any interest is payable and whether it may be waived in the future.

A formal loan agreement should be put into place but this need not be complex. If parents decide to charge interest on the loan, the income will be subject to tax. If the gifting parent were to die, the amount of the loan would remain within their estate for inheritance tax purposes.

Assignment of Contracts

Parents may purchase an off-plan property and closer to completion of the construction choose to assign/transfer the benefit of their contract (and the paid deposit) to their child. They may ultimately gift the balance or the child may obtain a mortgage for the amount payable at completion. In the latter case, parents and children should be aware that some mortgage lenders are reluctant to lend in cases of ‘assigned contracts’. If the property has gone up in value since the date of contract potentially capital gains tax could be payable and specialist advice should be sought. Similarly, the tax implications of gifting the deposit would apply, as set out earlier. If there have been changes in Stamp Duty Land Tax between the date of the contract and the date of the transfer then those changes may apply to the contract. Legal advice should be sought on this point on a case by case basis.

Conclusion

Whichever way parents choose to support a home purchase it is evidently important to seek comprehensive and joined up advice. Quastels offers specialist real estate and tax advice with access to a network of trusted advisers. Contact: enquiries@quastels.com

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Deemed Ownership in SDLT: Lessons from the Angela Rayner Case

A Political Storm Over Property Tax

Deputy Prime Minister Angela Rayner has found herself at the centre of a tax controversy involving the underpayment of Stamp Duty Land Tax (SDLT).

The issue arose after she purchased a flat in Hove in May 2025, paying standard SDLT rates on the £800,000 transaction. However, it later emerged that she had previously transferred her share of the family home, which she purchased in April 2016 with her then-husband Mark, into a trust for their disabled son. Under complex deeming provisions in SDLT legislation, Rayner is treated as still owning that property for SDLT purposes, thereby triggering the 5% surcharge applied to second homes or additional properties.

Though the trust had been established by court order and she had said that she had relied on professional advice from “a conveyancer and two experts in trust law”, Rayner ultimately admitted under-paying stamp duty by £40,000, referred herself to the independent ethics adviser and began discussions with HMRC about settling the shortfall. It is worth adding that the conveyancing firm had since denied that they gave additional SDLT advice and relied on Rayner’s instructions to compute the SDLT due. Now, with confirmation that she breached the ministerial code and her resignation confirmed, her political career appears to be in tatters.

Her case illustrates how technical tax provisions can entrap even high-profile public figures and highlights the importance of understanding deemed ownership rules under Schedule 4ZA of the Finance Act 2003.

Deemed Interests Under Schedule 4ZA of the Finance Act 2003

The additional SDLT surcharge on second homes is governed by Schedule 4ZA of the Finance Act 2003. Under paragraph 8, individuals may be deemed to hold a “major interest” in residential property even when they do not hold legal title personally.

Specifically:

“A person is treated as having a major interest in a dwelling if it is held in trust for a child (under 18) of the person, or of the person’s spouse or civil partner.”

In practical terms, this means that if a parent places a property into a trust for their minor child, even if done by court order, they may still be treated as owning it when calculating SDLT on future purchases. This can inadvertently trigger the 5% surcharge for owning multiple properties.

This provision aims to prevent tax avoidance through indirect ownership structures. However, it also catches entirely legitimate trust arrangements, including those established for the care of vulnerable or disabled minors.

Trusts for Vulnerable People: No SDLT Exemption

There is a common misconception that trusts for disabled beneficiaries enjoy broad tax exemptions. While Capital Gains Tax and Inheritance Tax rules provide favourable treatment for vulnerable beneficiary trusts, SDLT does not follow suit. HMRC’s SDLT Manual makes it clear that:

• A parent is deemed to have an interest in property held in trust for their minor child, regardless of disability.
• This applies whether or not the parent is a trustee.
• Court-ordered trusts do not override the deeming rules.

The Rayner Example

Angela Rayner purchased a property in Hove in May 2025 and paid standard SDLT, having transferred her prior home into a trust for her disabled son. However, under paragraph 8, she was deemed to still have an interest in that first property, meaning the higher SDLT rate should have applied.

Although Rayner notes she had relied upon professional advice from “a conveyancer and two experts in trust law”, HMRC’s position is clear: deemed ownership applies regardless of intent or legal title, and ignorance of the rule is no defence.

The Risk of Inadvertent Non-Compliance

Rayner’s case is not unique. Many individuals overlook these deeming provisions, particularly when trusts are set up for personal or protective reasons rather than for tax planning.

Key risks include:

• Unwitting underpayment of SDLT when purchasing a new property.
• Exposure to interest and penalties from HMRC (up to 30% in careless cases).
• Reputational damage, particularly for individuals in public office or regulated professions.

Even more critically, individuals acting as trustees, whether appointed by court or voluntarily, have a legal duty to be aware of the nature and effect of the trust agreement. Trustees are expected to understand their legal obligations, the structure of the trust, and the property held within it. This fiduciary responsibility extends beyond the administration of the trust itself and includes awareness of any tax implications that may arise when the trustee acts in a personal capacity, such as when purchasing property. Where a trustee fails to disclose a trust interest that could affect SDLT treatment, they may be deemed negligent, even if acting in good faith.

This highlights a broader issue which is that conveyancers can only act on what they are told. A buyer who omits material information, such as a role in a trust that holds residential property, risks incorrect SDLT treatment and exposure to penalties, regardless of their interest.

Conclusion

The Angela Rayner case has brought public attention to a corner of tax law that can have substantial consequences. The SDLT deeming rules are not concerned with fairness or intent; they apply automatically and without exemption. Legal and tax professionals advising on family trusts, particularly involving minors or disabled beneficiaries, must have a working knowledge of these provisions, and importantly, trustees, especially as the buyer of a residential property, must be aware of the need to disclose any interest (direct or deemed) in other properties, including trust-held ones to their conveyancers.

As the Rayner case shows, the cost of oversight is not just financial, but reputational.

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A Simple Guide to Property Ownership Options When Buying With Your Partner or a Friend

What are Joint Tenants?

Holding the property as joint tenants means that each person has an equal interest in the property. If one of you died, the survivor would automatically own the whole (100%) of the property.

What are Tenants in Common (equal shares)?

Holding the property as tenants in common, in equal shares, mean that you each own 50% of the property. If one of you died, your 50% share of the property would be left to whomever you choose under your Will. You may wish to consider this option if you are both contributing equally to purchasing your property but wish to decide who your 50% share is left to.

What are Tenants in Common (unequal shares)?

Holding the property as tenants in common, in unequal shares, means that you hold the property in anything other than 50/50 shares. It could be 60/40, 80/20 or even 99/1. You may wish to consider this option if you are contributing different amounts to purchase your property. Should you decide to hold your property as tenants in common with unequal shares, you should consider making a Declaration of Trust providing for more detail as to options on disposing of your share and contributions to property expenses.

Does This Affect Our Mortgage?

No, it does not matter how you hold your property when it comes to your mortgage. You are both jointly and individually responsible, meaning that you are not just liable for ‘your half’ of the mortgage.

Can We Change Our Minds Once the Property is Registered?

Joint Tenants to Tenants in Common: this is done by way of severance of joint tenancy. You can do this by yourself, or by appointing a Solicitor.

Tenants in Common to Joint Tenants: to do this, you both need to agree to the change. The documentation is more complicated. You should appoint a Solicitor to assist with this.

What is a Declaration of Trust?

In simple terms, it is a legally binding document that sets out the underlying ownership between the property owners. It can be drafted to suit your required needs, but it will mainly outline how much of the property you each own, the amount each person has contributed to the purchase, and the procedures for selling or transferring ownership. The existence of the Trust will need to be registered with HMRC and the Land Registry. To find out more, please contact our Private Wealth & Tax team who can assist.

If you have any queries about the contents of this article, please contact our Residential Real Estate team via the form below.

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