Parents investing in London property

Parents across London are drawing on their savings to fund deposits on first home purchases for their adult children, says Cluttons.

It attributes the resurgence in buyer enquires to an increasing number of people seizing the opportunity to invest in their family’s future through property.

With the London market now offering a strong potential return on investment, compared to the stock market and savings accounts, those with any level of funds suitable enough for a deposit are increasingly looking to take advantage of the current prices and historically low interest rates on offer.

Parents who have seen savings accounts become almost entirely unprofitable are using the extraordinary current value for money in the London market as a long-term investment plan for their children.

Not only can they make their money work for them again by buying close to the bottom of the price cycle and benefiting from the future recovery of the market, but they can also help their children onto the property ladder at affordable prices.

James Hyman, partner for residential sales at Cluttons, says: “We have seen numerous cases over the last few weeks of parents making enquiries on behalf of their children, either as an immediate plan or as an investment for them to take advantage of when they enter the workplace in years to come.

“Any family currently sitting on savings, whether it is £40,000 or £500,000, will recognise that now is the time to invest in a deposit for their children. Those who are able to meet the higher deposit levels currently required by lenders are finding they can access good mortgage rates and afford properties in London they could only dream of two years ago.”

He says people are now starting to recognise the potential in property, and parents are seeing a way to improve their own financial prospects, while giving their children a helping hand onto the property ladder.

He adds: “When the market starts to rise again and the child moves on up the ladder, parents will be looking to recoup their initial investment, plus capital growth. It seems the Bank of Mum and Dad is well and truly open for business.”