Investing in the future generation
06 February 2014
With the entry point on to the London property market getting higher as each year passes, buying a property for children is proving to be a popular way forward for those that can afford it. Prime Purchase, which has a specialist team for clients wanting to spend below £1 million, has seen an increasing demand in this area.
There are many ways that parents can “gift” a property but for those willing to put their children’s names on the deeds it is a tax efficient way of giving an inheritance early and thereby avoiding inheritance tax.
A two or three bedroom flat is a popular choice but with people staying in London much longer, buying a house that initially suits sharers but can in the long-term become a family home precludes the extra charges incurred by moving.
If the predictions are correct, buying a London property will continue to be a sound investment. Savills suggests that over the next five years the prime London suburbs will grow in value by 22.7% so buying now means that not only is the entry point “cheaper” than a few years down the line but it will enjoy positive growth in price values.
Children may ultimately dictate the property’s location but parents play an important role in steering them and by and large the search area tends to be in more established places and on the right side of London for the family home. Fulham, Clapham, Battersea, Wandsworth, Brook Green and Shepherd’s Bush remain popular choices for parents living in the south and south west and, for parents living north of London, Islington and Kilburn are preferred destinations.
Some parents, with a keen eye on long-term returns, are willing to take more of a punt and look at areas that are predicted to be on the rise. East London locations like Hackney, Shoreditch, Dalston and Haggerston, with their easy commutes for young professionals working in the IT/media industries and those needing to get into the financial district, are increasingly popular. The impending arrival of Crossrail is also opening up new areas such as Clerkenwell and Bloomsbury and, further west, Ealing.
Although buying a property for the next generation is predominately about getting children on the property ladder, the challenges that come with being a landlord and the responsibility of financial management are also important skills to understand at an early age.