New data from the Building Societies Association (BSA) reveals the expectations of parents and would-be first-time buyers when it comes to financial assistance for getting on the property ladder.
As average house price rises far outstrip average income increases, the challenge to get on the property ladder grows. For some years now, the so-called “Bank of Mum and Dad” has been a common way for many young adults to purchase their first homes. In fact, research in 2020 from Legal & General revealed that 56% of first-time buyers (FTB) under 35 received financial help from parents.
A recent BSA survey revealed that 53% of parents believe that older family should offer financial support to younger family members trying to get on the property ladder, a significant majority. Only 28% of respondents didn’t think they should. Nearly half (49%) expect to leave money to the younger generations when they pass away.
There did appear to be a slight generational divide in opinions here. Parents under the age of 60 said they were less inclined to provide financial support compared to those over 60. The BSA believes this is probably due to those over 60 having a higher value of assets than those below.
Interestingly, would-be FTBs aren’t expecting financial help; only 29% expect contributions towards their deposits from older family members when purchasing their first home.
45% of respondents expect house prices to rise over the coming year, with only 13% expecting them to fall. According to the experts at Savills, house prices will rise an average of 3.5% in 2022, a more manageable figure than the average 9.8% increase experienced in 2021. However, the continued rises do pose an issue for FTBs. Unless a lot of affordable housing becomes available, it’s unlikely that the Bank of Mum and Dad is going anywhere.
How can you help first-time buyers in your family?
If you don’t have a lot of savings available, you may be able to use equity from your own home to help your younger loved ones get a deposit together. We can help you remortgage and release equity which you can then gift. Of course, this entirely depends on your financial position and how much equity you have, but we can help you go through the numbers and possibilities.
If you’re a property investor, you may well be able to use the same remortgage process as above but use equity from a buy to let investment property. Again, this is something we can look into for you.
To find out how you could help a younger family member get onto the property ladder, get in touch with me, Emma Green, today on 01732 471670/07971 822372 or email me email@example.com and I’ll be happy to help.