RESEARCH has recently been published which shows that family members and friends are currently helping to finance one in four property transactions.

This new phenomena has been eloquently titled “the bank of mum and dad”.

Whilst this sounds like a fantastic idea, we recommend taking advice not just in respect of the tax implications, but also the legal implications for the family in the event of a future relationship breakdown.

If no clear agreement is made at the time the money is advanced then, in some circumstances, the partner could claim a beneficial interest in the property in the event of a separation or divorce.

However, if loan is set out in a formalised document like a Deed or Declaration of Trust, there will be a much stronger case that this money should be repaid in the event of a break-down and subsequent house sale.

Pre-and Post-Nuptial Agreements or Co-habitation Agreements are other ways to clarify the situation.

Contact The Family Law Co to discuss the options available to you.