More and more parents across the UK are choosing to transfer equity in their property to their children. For many, it’s as much about love, legacy and offering practical help as it is about tax planning and financial strategy. In an increasingly difficult economic climate, parents want to make sure that their children’s futures are secure.
In a world where homeownership feels out of reach for many young people, parents are stepping in, sharing the wealth built up in their homes to give their children a firmer footing.
Helping Children onto the Property Ladder
With property prices soaring and wages lagging behind, it’s no surprise that younger generations are finding it hard to save for a deposit or secure a mortgage on their own. For many parents, this situation evokes a sense of responsibility and a desire to help in ways that truly count.
Transferring equity can provide a vital step up. Whether by gifting part of the home or allowing a child to become a joint owner, this move can reduce the financial burden of deposits, mortgage eligibility, or monthly repayments.
This approach can make homeownership a reality for children who might otherwise struggle to afford it, especially in competitive markets like London, Manchester or Bristol. The decision to transfer equity is often born from a place of empathy, love, and a desire to see the next generation thrive.
Planning for the Future with Inheritance Tax in Mind
The transfer of equity can also play a strategic role in long-term estate planning. With the current inheritance tax (IHT) threshold set at £325,000, many estates that include property are at risk of a sizeable tax bill.
Transferring equity during a parent’s lifetime may reduce the taxable value of the estate, particularly if the parent survives seven years from the date of transfer. This is known as a Potentially Exempt Transfer under HMRC rules.
There is comfort in knowing that wealth built over a lifetime will directly benefit children and grandchildren, rather than being swallowed up by tax. However it is important to remember that giving away equity can affect your financial independence and entitlement to certain benefits.
Addressing the Costs of Later Life Care
There’s also increasing concern around the cost of long-term care. In England, those with assets over £23,250 are expected to fund their own care, which can include selling the family home.
Parents who want to protect the value of their home for future generations may consider transferring equity to children while they’re still in good health. This can feel like a way of preserving something meaningful, the memories and security attached to the family home.
However, timing is everything. If a local authority believes that the transfer was made deliberately to avoid care fees, they may challenge it under the Care Act 2014. That’s why it’s important to plan early and seek legal advice.
Strengthening Family Ties and Trust
In some cases, equity is transferred not as a financial necessity but as a symbolic gesture of trust and goodwill. When a child moves back home, takes over family responsibilities, or becomes a carer for ageing parents, a transfer of equity can reflect that new dynamic.
Parents often want to acknowledge that support, to give their children peace of mind, and to ensure continuity in the family home. A legal transfer can formalise that sense of stability and create reassurance for everyone involved.
Declarations of Trust and co-ownership agreements can be used to record the arrangement clearly, helping to prevent future misunderstandings or disputes, especially if there are multiple siblings or complicated family relationships.
Why Legal Guidance Matters
The decision to transfer equity should never be taken lightly. There are legal and financial implications, from Stamp Duty Land Tax (SDLT) to mortgage restrictions and potential capital gains liabilities.
Engaging a specialist transfer of equity solicitor ensures that the process is carried out properly, protecting both parties and avoiding unintended consequences. Solicitors can draft the necessary paperwork, seek lender consents, and update the Land Registry records to reflect the change in ownership.
A good solicitor will also talk through the family’s objectives to ensure that the emotional and practical outcomes align.
While every family is different, the desire to help, to protect and to plan ahead is a common thread. And in times of economic uncertainty, a gift of equity can be a deeply personal gesture of love and support, passed down from one generation to the next.
