We all know buying property is challenging, and that first-time buyers need all the assistance they can get.
However, in the current climate, even the Government backed schemes are often not enough support for first-time property buyers. This is why many people need help from family members, particularly when it comes to raising a deposit.
The sums of money involved with raising a deposit, can be eye-watering. However, a recent study indicates parents and grand-parents are offering much needed support.
The Bank of Mum and Dad is being supported by The Bank of Gran and Grandad it seems in 2021!
A recent study into first-time buyers, deposits and family support suggests there is a growing level of help provided by grandparents.
According to new research looking at 2020, the average gift to buy property was £42,500. This is close top two-thirds of the average deposit required by a first-time buyer, which stands at £57,278.
As you would expect, the gifts from people in London were more generous, to a tune of £102,826; but given the cost of buying property in London, this makes sense. The average size of deposit offered in the South East of the country was £61,500.
However, while the size of average deposit gift in places like Yorkshire or the North West were smaller in size, they were just as important, if not more so. The average gift for buying a property in Yorkshire was £33,313; but this accounts for 77% of the average deposit needed. In the North West, the average gift of £34,347 accounts for 76% of the average deposit needed.
Will Hale, CEO at Key, comments: “Finding almost £60,000 to use as a deposit for your first home is tough – especially in the current economic environment - and therefore it’s not surprising that many younger people have looked to take advantage of the stamp duty holiday. In 2020, older homeowners released almost £755 million of equity in order to help younger members of their family meet a range of costs including supporting them with an average of £42,500 to use for a house deposit.”
Will continued by saying; “For many people, these gifts will have been the enabler to them buying their first home and is a perfect example of how intergenerational wealth transfer can deliver positive societal benefits. The stamp duty holiday has certainly been a catalyst for more activity in this area but helping family is always a major motivation for older homeowners exploring their equity release options.”
Will concluded by saying; “That said, it is vitally important that homeowners get specialist advice if they do decide to use some of the value tied up in their home to help their families. Balancing generosity with their own financial security is vital and a good adviser will help them explore all their options.”
These are challenging times in the property market, but there is activity and demand for homes. At Sovereign House, we are keen to help you with whatever you need in the Hackney housing market. Why not call us on 020 8985 5800 or visit us at 213 Victoria Park Road, we look forward to assisting you with your property needs.