Parents and children should be more business-like when providing young people with money to help them get on the property ladder.
Research by the London School of Economics, sponsored by the Family Building Society, suggests there is often no written record of any transactions because many families are reluctant to talk about money.
With The Bank of Mum and Dad now the UK's sixth-largest lender, family’s needs to decide whether the money is to be a gift or a loan, if interest is to be paid, what any repayment arrangements are to be and what happens if the parents' or children's financial circumstances change.
Although parents are happy to help their children buy a property, around half of those surveyed thought it was unfair that they had to do so. In fact, in some cases, the children had higher incomes than their parents.
The report recommends that a set of guidelines or a template be developed to help ensure parents and children have discussed exactly what they are doing and what everyone's responsibilities are regarding when, how and indeed if repayments are to be made.
Mark Bogard, Chief Executive of Family Building Society, said: "Failing to carry out some basic planning and documentation can store up a whole host of problems if things go wrong. Things such as the break-up of relationships, the death of one or both parents all need to be considered. So do the requirements of HMRC."
Source: Family Building Society survey