But even parents are feeling the pinch. Whilst parents look set to help-out with more than 316,000 house purchases this year, the total value of their lending is down by an estimated 17% on 2017.
According to research by Legal and General and CEBR, over 70% of parents use cash savings to help their offspring step onto the property ladder. The annual average parental contribution (both loans and gifts) looks set to be £18,000 this year across the UK, in London it’s £30,600.
The data reveals almost three in five homebuyers under the age of 35 and one in five 45-55-year-olds get financial help from family and friends.
In London, over 40 per cent of buyers had financial help from family to invest in property, according to Hometrack UK.
Rapid house price growth in recent years and the rising cost of living have all made home-ownership much more challenging, particularly here in the capital. It’s natural that parents want to help their children out – but times are hard for many families, many have raided their life savings or pensions and some move into smaller properties to help their children out. We’ve heard of some families remortgaging or taking out loans to help.
For those who can’t or don’t want to turn to the Bank of Mum and Dad there are other options – the government’s Help to Buy scheme offers a 40% loan on new-build properties, Lifetime ISAs and Help to Buy ISAs can be a good way of saving and getting a contribution from the government and shared ownership can be a good starting point.
One in 10 of parents surveyed said helping their children buy a home had made them feel less secure about their own financial future and almost one in five have had to make sacrifices due to lending the money (such as a going without a holiday or car purchase).
There are other ways parents can help – they could consider buying a property in partnership with their children and accepting rental payments for their share. And there are options for parents to act as guarantors, which sometimes enables buyers to get a larger mortgage.
Although property prices seem out of reach for many, at least 16 out of 46 London boroughs are beginning to see price drops of up to 2.8 per cent per year. In parts of Hackney prices have dropped below their value two years ago.
70% of parents use cash savings to help their offspring step onto the property ladder.
Posted 9th July 2018
ABOUT THE AUTHOR