‘Honey, I’m suing the kids’: court cases treble as Bank of Mum and Dad demands refunds
The Bank of Mum and Dad has grown into a top-10 mortgage lender – and now it wants its money back.
Parents who help younger generations onto the property ladder are increasingly taking their own children to court, with cases rising threefold, Telegraph Money can reveal.
There has been a spike in cases of families arguing over whether gifts intended for deposits towards a first home were actually loans to be repaid.
It follows the growth of the Bank of Mum and Dad over the past decade into one of the nation’s largest de facto lenders, as soaring prices have kept would-be buyers off the housing ladder. Last year Telegraph Money calculated that parents were gifting almost £100,000 per child.
Joanne Wescott of solicitors Osbornes said there were now three times as many cases of parents pursuing their children over property loans, compared to 2016.
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“It’s not just the very rich that are going to court over money disputes,” she said, “but average middle-class families as well. As the Bank of Mum and Dad has grown, cases have gone up, with divorce one of the biggest drivers of friction.”
Research from insurer NFU Mutual found that close to half of parents with adult children said a lack of trust in their children-in-law would affect how or when they gifted money for a first home.
A fifth described their children’s partners as “money-grabbing”, “secretive” or “dishonest”.
Chris Carr, a barrister at 36 Group, said disputes often arose where there was a threat of a former spouse “running off with family money”. He said this also applied to parents, adding: “If they have gifted money to a stepchild and later split from their partner or fall on hard times, they may well want that money back.”
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In a recent High Court case, entrepreneur Karl Watkin, who had become bankrupt, attempted to sue his own daughter to claw back some of the money he gifted her to buy her first home.
Mr Watkin argued that he had the only interest in the proceeds of nearly £500,000 from the sale of his daughter’s properties, which he had helped her to buy.
The court heard of the daughter’s “extremely privileged” upbringing, provided for in part by Mr Watkin’s £1.6m annual income, allowing her to spend £6,000 a month on an American Express credit card at her parents’ expense. Regular gifts to his children, including a polo pony and customised horse box for another of his daughters, led the judge to rule against Mr Watkin.