Some British parents are paying an average of nearly £40,000 to help their children get on the property ladder – that’s around a quarter of the price of the average first home.
In a new PrimeLocation survey, around two thirds (63.4 per cent) of parents said they had contributed to their children buying their first home. Of these, a lucky one in nine children (11 per cent) were given £100,000 or more, while seven per cent of parents said they’d bought a house for their offspring outright.
“Time was when parents would cut financial ties with their children after they left school,” said PrimeLocation’s property analyst Nigel Lewis.
“But increasingly, the costs of getting started in life are rising, and parents are having to step in and help – including getting them onto the property ladder.”
PrimeLocation.com surv-eyed 712 UK parents in March 2012. They found many had made significant sacrifices to fund their children’s first property, with a considerable number downsizing or remortgaging to find the money for the deposit.
“We’re seeing an increasing number of first-time buyers unable to leave home without parental support,” said Jason Tebb, regional managing director for Your Move, which has offices in Sutton.
“However, recent trends suggest this assistance goes beyond that of ‘bank of Mum and Dad’ deposits.
“With rents continuing to increase – albeit slower in April than in March according to the latest buy-to- let index from our parent company, LSL Property Services – we’re finding renters also need to get parental help to fund their first deposit on a rental home too. And due to ongoing economic uncertainly, we don’t see this situation easing in the short term.” The PrimeLocation survey also found 11.2 per cent of parents allowed their children to live at home to save money for a deposit, while 5.2 per cent helped with the mortgage payments.
Among parents whose children still live at home, an overwhelming majority said that they would be willing to make significant sacrifices to ensure their children are able to buy a home. More than a quarter (28 per cent) said that they would be willing to sacrifice luxury or non-essential purchases, 20 per cent would withdraw money from a pension or savings, 17 per cent said they’d downsize or release equity in their homes and 13 per cent would take on new or additional mortgage debt. Only 6.4 per cent said they wouldn’t be contributing at all.
“With nearly two thirds of the UK’s parents providing financial assistance, this shows that despite the difficult economy, people are still viewing the property market as a worthwhile investment,” concluded PrimeLocation’s Nigel Lewis.