July 29, 2026
SDLT
Amanda Perrotton
For many parents, helping an adult child onto the property ladder is one of the biggest financial decisions they’ll ever make. Whether you’re gifting a deposit, lending money or buying a property together, it’s a generous gesture – but one that can have significant legal and tax consequences if it’s not structured correctly.
The good news is that, with the right planning from the outset, many of the common pitfalls can be avoided.
One of the first decisions to make is whose name the property should be bought in. It sounds straightforward, but this choice can affect Stamp Duty Land Tax (SDLT), Capital Gains Tax (CGT), Inheritance Tax (IHT), as well as the legal protections available to everyone involved.
The most common ownership structures are:
This is the most common arrangement where parents are helping with a deposit. However, it’s important to establish whether the parents’ contribution is intended to be a gift, a loan, or whether they will retain an interest in the property. The answer can affect both the family’s tax position and the legal protections available, so it’s important to document the arrangement properly from the outset, whether that’s through a Deed of Gift, Loan Agreement or Declaration of Trust.
Parents and adult children may decide to purchase the property together. Where contributions are unequal, owning the property as tenants in common is often the most appropriate structure, as it allows each person’s share to be clearly defined. A Declaration of Trust can then record each party’s financial contribution and beneficial interest in the property.
In some cases, parents may purchase the property themselves, allowing their child to live there without acquiring a legal interest. While this may suit some families, it can create different tax consequences and should be considered carefully before proceeding.
Choosing the right ownership structure from the beginning can help avoid unexpected tax liabilities, protect family wealth and reduce the risk of disputes later on.
Many parents are happy to gift money outright but still want reassurance that those funds are protected, particularly if their child is in a relationship.
Depending on the family’s circumstances, this may involve preparing a Deed of Gift, putting a Declaration of Trust in place or registering restrictions against the property’s title. These documents can help record everyone’s intentions, provide clarity if circumstances change and reduce the risk of future disputes.
Parents should also consider what might happen if their child’s relationship breaks down in the future. While no document can completely remove that risk, properly documenting the arrangement can provide valuable evidence of where the funds came from and what was originally intended.
The tax position also deserves careful consideration. An outright cash gift does not itself attract SDLT, but the position can change if the parents retain an interest in the property. For example, where parents already own another residential property, retaining a beneficial interest may result in the higher rates of SDLT becoming payable. Non-UK resident parents may also need to consider the additional non-resident surcharge.
Inheritance Tax should not be overlooked either. Parents who intend to make a genuine gift should ensure they are not unintentionally retaining a benefit in that gift, as this could affect the inheritance tax treatment as part of their wider estate planning.
Some parents prefer to lend money rather than make an outright gift, particularly if they expect the funds to be repaid when the property is sold or if they want additional protection.
If that’s the intention, the arrangement should be properly documented in a Loan Agreement. This should clearly set out the repayment terms, whether interest is payable, what events trigger repayment and whether the loan is secured against the property.
Where appropriate, parents may also wish to register a legal charge over the property. If there is already a mortgage in place, the lender’s consent will usually be required, and it’s important to remember that the lender’s charge will generally take priority if the property has to be sold.
Having the correct documentation in place can also provide greater protection if the child later experiences financial difficulties or becomes insolvent.
Joint purchases between parents and adult children are becoming increasingly common as families work together to overcome the challenges of today’s property market.
Where everyone is contributing financially, it’s sensible to agree from the outset:
A Declaration of Trust is often one of the most important documents in these arrangements. It records the agreed ownership structure and helps ensure everyone understands their rights and responsibilities from the outset.
Joint ownership can also have significant SDLT implications. If a parent already owns another residential property, the purchase may be subject to the higher rates of SDLT, even if the parent is only acquiring a share of the property. SDLT is calculated on the full purchase price, not simply the parent’s share, making specialist advice particularly important before contracts are exchanged.
Families should also think about longer-term issues, such as what happens if one party can no longer contribute financially, wants to sell, or if the child’s share later becomes exposed to relationship breakdown or creditor claims. Discussing these scenarios before the purchase is far easier than trying to resolve disagreements afterwards.
Helping a child onto the property ladder should be an exciting milestone, not something that creates unexpected tax liabilities or family disputes.
Whether you’re making a gift, lending money or purchasing a property together, taking advice before contracts are exchanged can make a significant difference. The right ownership structure, supported by appropriate legal documentation and specialist tax advice, can help protect family wealth, manage expectations and avoid costly surprises in the future.
At Bell Howley Perrotton, we regularly advise families and their solicitors on the legal and tax aspects of intergenerational property arrangements. From SDLT, CGT and inheritance tax advice to preparing Deeds of Gift, Loan Agreements and Declarations of Trust, we can help ensure your arrangements are structured correctly from the outset, giving everyone greater certainty and peace of mind.
