Many of our clients are hoping to sell their empty houses if the market improves. Some of them are renovating but others are just waiting for a buyer to come along. One of the main problems in the last couple of years has been the shortage of first time buyers; and this has been partly caused by lenders requiring large deposits that young people find hard to accumulate.

If parents have spare cash they could help out with the deposit but not all families are as lucky as this. Some parents may be willing to put up their on houses as security. If they have substantial equity in their house it may be possible for them to stand as guarantors in this way but only if they are prepared to put their own homes on the line! The shortage of first time buyers is one reason why our unoccupied property insurance clients have found it difficult to sell.

Parents need to be quite clear about the risks they are taking before entering into any commitment to help their children. It is quite common for parents to be guarantors if the children are renting accommodation, while at university for example. However, this carries risks. The obvious one is that the parents will be liable for the child’s unpaid rent but it could be far worse. The guarantee may well apply to the whole of the rent under the tenancy- not just the child’s share. The guarantee may also cover all of the liabilities in the tenancy agreement- not just the rent. If so, the parents could find themselves dragged in to disputes about damage to the property.

If you are trying to help a child buy a home it will pay to talk to a specialist advisor about all the deals on offer and get everything checked by your lawyers. If you are asked to become a guarantor of a tenancy make sure you understand exactly what obligations you will take on.