LENDING A HELPING HAND

Parents often help their grown children buy a home; other young adults assist their parents to downsize

“SHARING and caring” is predicted to be a trend in the property market this year, with more parents and their adult children helping one other out.

Over the past 12 to 18 months, online real estate agency PropertyFox has seen an increase in adult children renovating their properties to accommodate their parents and parents assisting their children to purchase property.

Nardee Cotterell, chief operations officer at the agency, says many young buyers are looking to build a cottage or convert outbuildings or a room for their parents.

Many adult children are also helping their parents with the sale of homes ahead of downsizing for retirement.

And many parents are also helping their grown children to purchase property, especially when bonds are involved.

“Parents tend to be able to obtain a bond more easily or for a higher amount as they’re often more financially established or have a better credit rating.

“The property would then be in the parents’ name while the children are the occupants.”

John Birkett, franchisee of Rawson Properties Claremont, says while parents can stand surety, banks “seem to prefer it if the parents is a co-owner”.

“In cases where the parent can pay cash for the property there is no problem in registering the property in the child’s name.”

When parents buy properties for their student children who are enrolled at colleges for at least three years, Birkett says it is worth it for parents to put the property in their children’s names.

“This gives a child a kickstart into the property market and if the child sells one day it would be regarded as their primary property which means that no capital gains tax would need to be paid...”

Parents who are financially able do assist children with a deposit and cost requirements of buying a property, agrees Samuel Seeff, chairman of the Seeff Property Group. Parents often feel that, rather than pay rent to a landlord, there is merit in helping their children buy a property so that monthy payments are an investment into bricks and mortar.

“Even during a flat economic phase – as we are seeing right now – there is still a measure of capital growth and property generally also retains its value.”

Parents generally buy apartments or entry level sectional titles for their children.

PICTURE: ANJA OSENBERG SHAKE ON IT More parents are helping their adult children take their first steps on to the property ladder..