Bank of Mum & Dad acting as guarantoor for childrens flat purchases inLondon where all the jobs are

[coypondboy]

Hi,

I just wondered if anyone knows the long term implications for parents who have unwittingly been caught up in the cladding crisis by acting as guarantor's for there kids on large mortgages beyond their reach on a typical single graduate salary in London but desperate to get them on the housing ladder and als giving them the deposit of typically 5% to purchase thropugh the help to buy scheme or shared ownership but whose flat has otr will have fire safety issues in the next 3-4 years as more EWS1 surveys are done.

The scale of the problem is being highlighted by Daily Mail on their front page today and at the following link:

www.dailymail.co.uk/news/article-9109117/Millions-stuck-fire-trap-homes-Grenfell-blaze

What would happen if they default on mortgage/rent/service charge will parents be liable to foot the bill?    

[coypondboy]

Housing market will never collapse whilst the Bank of Mum & Dad is available for the many.

https://www.thetimes.co.uk/article/the-parents-forced-to-sell-their-homes-and-raid-their-pensions-to-pay-childrens-cladding-bills-trng832k2

[simon2]

Can only imagine a very small percentage of mortgages being guaranteed by BOMAD - what sense does this make for either party instead of the more traditional way of simply gifting the money?

No doubt there also will be some parents who have downsized while the going is good, inadvertently releasing a wad of cash to help pay off bills.

But again, the media will try to present it that 1) these cases are numerous and 2) the parents sole reason for selling their house was to pay for their offsprings cladding bills. 

I would think the scale of this particular problem is pretty small, but the papers will find it pretty easy to find bandwagon jumpers who can exaggerate their circumstances.