Wed, 28 Nov 07
With the UK’s average first time buyers’ property price now at £162,055*, parents are paying on average £21,314 to help their children get on the property ladder, according to new findings by Alliance & Leicester Mortgages’ movingimproving index...
High house prices, spiralling student expenses and the rising cost of living means more and more parents are helping their children finance their first home.
One in five (20%) has already dipped into their savings to help their children buy their first home, while a further fifth (22%) plan to offer financial help to their offspring when they come to buy. Mums and dads are now prepared to donate £3,637 more to their children’s first home than 2006’s average donation of £17,677.
Parents under pressure
These expectations are putting parents under pressure. More than one in three (34%) say they would feel guilty if they were unable to put money towards their child’s first home. Dads are more concerned with playing provider when it comes to flying the parental nest.
Half (48%) of fathers see it as their responsibility to help their children out, whereas mums are more concerned with ensuring their offspring can afford a comfortable standard of home. Almost one in 10 savvy parents say they would invest in their own future by buying a property for their children to rent from them.
Stephen Leonard, Director of Mortgages at Alliance & Leicester, says: It has become increasingly common for parents to offer financial assistance to their children when they come to buy their first home. Rising house prices mean first time buyers have to find bigger deposits to secure their property, with many having to fork out for stamp duty as well. This means extra funding from parents can often make the difference between renting or being able to get on to that first rung of the property ladder.
Strong urge to support children
In contrast, it seems many first time buyers do not realise their parents are willing to help them gain a foothold on the property ladder as less than one in five (18%) first time buyers have asked, or are planning to ask, their parents for financial help towards a property purchase.
The research also revealed that one in 10 (9%) 18 to 24 year-olds was prepared to ask a grandparent for a financial leg up onto the property ladder - if their parents can’t dig deep enough into their pockets.
Stephen Leonard adds: Whatever the motivation, many parents feel a strong urge to support their children financially when buying their first home.
However parents should also remember that as well as helping their son or daughter to fly the nest, investing in a property through a buy to let mortgage, or loaning the money could benefit their own future financial security as well.
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