It seems that Nick Clegg’s idea of allowing parents or grandparents to use tax-free cash lump sums from their pension funds as a guarantee for their children’s or grandchildren’s mortgage, is beset with problems.
Presently, many young adults are not able to get a foot on the property ladder due to requests by mortgage lenders for large deposits, forcing them to spend vast sums of money monthly on rent payments.
Mr Clegg’s proposal was that grandparents or parents would be able to offer their tax free lump sum as a guarantee, in cases where deposits could not be paid.
However, legal professionals have argued that this lump sum cannot at present be allocated to specific mortgage lenders and that parents or grandparents cannot be forced by mortgage companies to offer the money as an alternative to a deposit.
The government then, has been criticised yet again for not thinking this strategy through properly, before announcing it to the British public.