Assistance From Loved Ones Boosts First Time Buyers
We all know buying a home is tough, and many first-time buyers are unsure of how they will step onto the property ladder.
There are Government backed schemes which help first-time buyers. However, when you think of the size of deposit required to help a buyer purchase their first home, even more assistance is required.
Therefore, it shouldn’t be a surprise to see there is an increase in grandparents assisting their loved ones when and where they can. The Bank of Mum and Dad has been a common phrase for first-time buyers, and it appears as though The Bank of Gran and Grandad is likely to be a feature too.
All help can make a difference
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.
Gifts vary across the country
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.”
At Prestige & Village, we care about our community, and supporting others. We aim to provide you with as much help and assistance as we can. If you have any property or housing questions, please feel free to contact us today.Back to blog