Parents are increasingly stepping in to assist their children on to the
proverbial property ladder by unlocking the increased value in their family
homes - to the benefit of both parties.
Gerhard Kotzé, CEO of the ERA property group in South Africa, says that in
spite of the recent market slowdown, property values now are approximately
double what they were five years ago, and there is enormous equity in many
"By the same token, the rise in property values has placed home ownership
beyond the reach of many young people and our market feedback is that in a
growing number of instances now, parents are re-financing their homes and
accessing the additional equity they have available to buy homes for their
"Alternatively they are opting to downsize and use additional funds realised
from the sale of their larger home to acquire additional properties that are
then occupied by their offspring - the idea being that the children will
acquire the property from the parents as and when they can afford to do so,
and quite possibly at a discount to the going market rates at that time.
"Meanwhile the children effectively become "tenants" to the parents, so this
goes beyond the conventional buy-to-let strategy," he notes. "It also means
the parents/ landlords should not have to deal with the usual vagaries of
the rental market with regard to finding or managing tenants."
There are of course some potential problems with such arrangements. "One is
that the relationship between the parents and children has to be very strong
and another is that the children's circumstances may change along the lines
of, say, needing a larger property, being transferred, changing careers or
"On the other hand, this is a route by which grown children are able to
leave home at an earlier stage than might otherwise be possible, and open up
all manner of options for everyone in the family."