Answers · UK 2025/26

What are the options for parents helping their children buy a first home in the UK?

Parents can help first-time buyer children through a gifted deposit, joint borrower sole proprietor (JBSP) mortgage, acting as guarantor, or buying jointly. Each option has different tax, mortgage, and Inheritance Tax implications. A gifted deposit is the simplest approach but IHT planning is important for large gifts.

Last updated: 30 June 2026Last reviewed: 30 June 2026How we verify

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With average house prices far exceeding what many first-time buyers can raise independently, parental assistance has become a common part of the homebuying process. The right approach depends on your financial position, the child's mortgage eligibility, and the long-term tax implications. **1. Gifted deposit** The most common approach. Parents give a lump sum as a gift (not a loan) toward the deposit. - Lenders require a signed **gift letter** confirming no repayment is expected - No SDLT implications for the parents - **IHT**: the gift is a Potentially Exempt Transfer (PET). If the parent dies within 7 years, taper relief applies; full IHT exemption after 7 years - Annual exemption of £3,000/parent/year can be used to reduce IHT risk - Gifts from income (regular and affordable gifts from surplus income) are immediately IHT-exempt **2. Joint Borrower Sole Proprietor (JBSP) mortgage** The parent is on the mortgage but not on the property deeds: - Parent's income boosts borrowing capacity - Child owns 100% of the property - **No SDLT surcharge** for the parent (as they are not a legal owner) - Parent is fully liable for mortgage repayments if the child defaults - Affects the parent's own mortgage affordability calculations **3. Guarantor mortgage** Parent guarantees the child's mortgage, using their own property or savings as security: - Child owns and borrows in their own name - Parent is only liable if the child cannot pay - Risk: parent's home could be at risk if the child defaults **4. Joint purchase (both on deeds)** Parent and child buy together: - If the parent already owns property: **3% SDLT surcharge** applies to the entire purchase - Both are legally liable for the mortgage - Gains on disposal: child's share may qualify for Private Residence Relief; parent's share does not - A **deed of trust** should record each party's beneficial interest **Deed of trust** Wherever parents contribute money or security to a purchase, a deed of trust drawn up by a solicitor protects everyone's interests and clarifies what happens on sale or relationship breakdown.