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Pension for Property Scheme

Deputy Prime Minister Nick Clegg has unveiled a new plan to help first time buyers by allowing them to use their parents’ and grandparents’ pension funds to help raise deposits.

Bank and building societies’ large deposit requirements mean for many of those managing to buy, especially in expensive areas such as London and the South East, are dependent on family help to raise money.

Nick Clegg said: “We have thousands of young people who are desperate to get their feet on the first rung of the property ladder, but deposits have doubled and the number of young people asking help from family members has doubled……It’s a pension-for-property scheme, and that’s yet another example of the way in which we’re getting people who don’t have a great deal of disposable income, but do have a pension pot, to use that for the good purposes of helping their children and grandchildren buy a home that they can call their own.”


Exact details of how the scheme would work have not been revealed. It would potentially involve pension pots being able to act as a guarantee for first-time buyers borrowing larger sums of money than lenders would typically lend them. This type of arrangement would obviously be compllicated and would invairably involve the parents or grandparents receiving indepdent legal advice on the desirability of this type of arrangement. In some cases the pension trustees may require advice. This would clearly place additional barriers in the way of the purchase.

In addition whilst many people would be happy to risk their pension for their children or grandchildren would they be happy to provide this guarantee for their partner or spouse if the property was purchased in joint names?

It remains to be seen as to whether this is a viable kick start to the housing market.

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