Uncertainty has been gripping the British housing market for the past six months, but mothers and fathers seem unaffected. Indeed, they see 2010’s relatively static prices as an investment opportunity that will benefit their children. Mike Harrison of chartered accountants Saffery Champness says that many parents with cash at hand are choosing to spend it on property now.

‘Certainly, there is a good number of people looking at the reduction in house prices as an opportunity to acquire property for the next generation in key parts of country. In the past four to six months, we’ve had several clients who have bought properties for when their teenage children will be in their twenties.’

Not everyone plans that far ahead, of course. Edward Sugden of buying agents Property Vision says he ‘can’t quite see the logic of someone buying a country property for Johnny, who is eight’, but he has noticed a modest rise in enquiries from parents looking to purchase homes in university towns.

The logic behind this choice is sound: ‘The cost of renting hasn’t gone down, whereas property prices have,’ explains Michael Fiddes of Strutt & Parker. ‘University towns have a good letting market, so even after the children have finished their studies, parents are still going to have a market for their home.’ Among the most sought-after university destinations are Cambridge, Oxford, Edinburgh and Durham, according to Mr Fiddes. Underlying demand for properties in some of these towns-notably Cambridge is such that the market hasn’t suffered as much as elsewhere.

Parents of university students aren’t the only ones looking to buy. Also very active are those who want to help their (often older) children beat the credit squeeze. More than two years after the collapse of Lehman Brothers, mortgages remain tricky and lengthy to obtain. Mr Fiddes says that the key to getting ‘a sensible mortgage’ is to put down a 40% deposit, but this can prove particularly hard for first-time buyers, so parents are stepping in to help.

‘Parents realise that it can be incredibly difficult for their children to buy property-the deposit can be a real problem,’ agrees Lucian Cook of Savills. ‘At the same time, they see the opportunity of buying at this point in the market cycle.’ Mr Cook says this trend is particularly noticeable in the new-build market, where ‘you see three types of buyers: parents buying a home for their children, parents buying with a view to their children perhaps living there in the future, and parents contributing to their children’s purchase.’ London property is also popular.

‘At the beginning of 2010, we witnessed a substantial increase in sales to young first-time buyers in
the Fulham area,’ says Robert Sturges of Chesterton Humberts. ‘This is most often supported by parental help. Approximately 90% of sales to first-time buyers through our Fulham offices are helped along by the Bank of Mum and Dad, with some parents contributing up to 75% of the purchase price.’

Other parents choose to create a nest egg for their children by buying investment homes that their offspring will one day be able to use, let, or simply resell. According to Henry Holland-Hibbert of Strutt & Parker, London is appealing because it has unit sizes to fit every budget, from £150,000 to £10 million. It also offers the best yields for residential homes and good capital-growth prospects.

‘Parents often put the property in a trust for their children, so that it belongs to them and they can look forward to capital appreciation,’ he says. ‘It’s a tax-efficient way of passing value, and if the child doesn’t want to live in the property, there’s always a very vibrant rental market for it.’

Regardless of what type of property parents are purchasing, however, Mr Fiddes has a piece of advice to share with them-go for the best location you can afford. ‘You’re better off buying the worst house on the best road than the best house on the worst road,’ he says. ‘If you buy a blue-chip property, in the long term, you won’t go wrong.’

Homework

* Many lenders want 40%

deposits

* Key

university destinations are Cambridge, Oxford,

Edinburgh and Durha
m

* Trusts

are a tax-efficient
way of passing value

* Go for location over property: buy in

the best