According to a July 2016 article in the Daily Telegraph, many parents and grandparents are giving their children money to enter the buy-to-let property market.

The Daily Telegraph estimated that parents and grandparents in the UK have contributed around £5bn to help their children buy their first home. This makes the ‘bank of mum and dad’ the UK’s 10th biggest mortgage lender.

Now, the Daily Telegraph has discovered a new trend for parents to give financial help for their children investing in buy-to-let property. Instead of buying property to live in, many young people are purchasing buy-to-let properties as their first step on the ladder, and to receive rental income.

Most of these investments have been outside London. In the same article, My Home Move, a conveyancing organisation, highlights the Midlands as a good area in which to invest in property as buy-to-let yields are somewhere between 5-6% there, compared to a London yield that is dropping below 4%.

Many investors, after owning a buy-to-let property for a while, then release money from it to use as a deposit for other property, even though a second property will mean paying an extra 3% in stamp duty.

One successful investor quoted by the Daily Telegraph. Nicole Dean, used £25,000 gifted by her father to invest in property. She recommends the arrangement to those able to do it, saying:

“It was nice and easy. It’s something we’d definitely do again as it’s all gone really well.”